Economic Substances Regulations in UAE

What are the Economic Substance Regulations (ESR) in the United Arab Emirates?

The UAE adopted a Resolution on Economic Substance on April 30, 2019, and these regulations apply to all private sector businesses. This regulation establishes the minimum financial and tax requirements that approved organisations operating in the UAE must adhere to. This resolution was adopted as part of the OECD’s membership criteria, as well as the Framework’s relevant taxation and auditing requirements.

Economic Substance Regulations and Business in the United Arab Emirates

This regulation applies to all private sector companies in the UAE, including onshore and free zone businesses. Companies that outsource operations and have those activities carried out in the United Arab Emirates must also comply with the ESR.

CIGAs can be used

The following are the Core Income Generating Activities (CIGAs) that should be filing the declaration:

  • Banking Industry
  • Business of Insurance
  • Investment Fund Management is a company that manages investment funds.
  • Lease – Business Financing
  • Company at the Headquarter
  • Business of Shipping
  • Business of a Holding Company
  • Business of Intellectual Property
  • Company of Distribution and Service Centers

Filing / Submissions

All approved entities subject to the regulations must notify their Regulatory Authority of their intent to file an economic material declaration and file the declaration within 12 months of the end of their financial year.

Due Dates / Deadlines for Economic Substance Regulations in the UAE

Filing of the details is required for financial years beginning on or after January 1, 2019 and ending on December 31, 2019, or beginning on April 1, 2019 and ending on March 31, 2020.

The filing deadline is usually by the end of the first quarter of the following fiscal year, and it will be published on the Ministry of Finance’s website.

Penalties for Economic Substance Regulations in the United Arab Emirates

Noncompliance with the Regulations or failure to file the declaration can result in penalties, including the suspension, revocation, or non-renewal of the company’s registration, as well as the exchange of relevant details with foreign bodies.

There are several exceptions.

If a corporation or organisation does not receive any revenue from the above-mentioned related activities during its financial year, it is excluded from the obligation to pass the economic substance examination and file an economic substance declaration for that period.


What role does Simply Finance Accounting Services play in Dubai, United Arab Emirates?

Simply Finance Accounting and Bookkeeping Services in Dubai, UAE, are reputed specialist Tax and VAT consultants. We are one of Dubai’s best internal audit firms, and we will help you audit and file the declarations needed by the ESR regulations. Simply Finance will evaluate and make recommendations on your company’s compliance with ESR specifications and regulations, as well as assist you in completing all relevant submissions and qualifying for the review.

Simply Finance is a leading accounting company in Dubai, United Arab Emirates. We have two accredited FTA licenced and registered TAX Consultants in Dubai, which is our specialty. We are the VAT Consultancy in UAE experts for all forms of Tax Agent Services in the UAE.

In the United Arab Emirates, Simply Finance offers the following accounting services: CFO Services | Accounting Outsourcing Services | Accounting Services | Internal Auditing | Tax Agent Services | Vat Consultation | Auditing Services |