ESR – Economic Substance Regulation- UAE

ESR – Economic Substance Regulation- UAE

Economic Substance Regulation- UAE

Why ?

The UAE introduced Economic Substance Regulations to honour the UAE’s commitment as a member of the OECD Inclusive Framework on BEPS, and in response to a review of the UAE tax framework by the EU which resulted in the UAE being included on the EU list of non-cooperative jurisdictions for tax purposes (EU Blacklist). The issuance of the Economic Substance Regulations on 30 April 2019 (the Regulations), and the subsequent release of the Guidance on the application of the Regulations on 11 September 2019, was a requirement for the removal of the UAE from the EU Blacklist on 10 October 2019. The purpose of the Regulations is to ensure that UAE entities that undertake certain activities (see question 4) are not used to artificially attract profits that are not commensurate with the economic activity undertaken in the UAE.

Who is subject to the Regulations?

The Regulations apply to UAE onshore and free zone companies, branches, partnerships, and other UAE business forms (referred to as Licensees) that carry out any of the following Relevant Activities. 

● Banking Businesses

● Insurance Businesses

● Investment Fund Management Businesses

● Lease-Finance Businesses

● Headquarter Businesses

● Shipping Businesses

● Holding Company Businesses

● Intellectual Property Businesses

● Distribution and Service Centre Businesses

Who needs to notify and by when?

Licensees that undertakes a Relevant Activity (irrespective of whether the Licensee qualifies for an exemption under the Regulations or has earned income from the Relevant Activity during the relevant financial period) need to submit a simple notification with its Regulatory Authority. Notifications for the financial period 2019 can be filed on or after 1 January 2020 and before the Deadline specified by the Relevant Regulatory Authority.  Most of the Authorities set the notification deadline as 30 June 2020.

Who needs to file an economic substance return and by when?

Only Licensees that earn income from a Relevant Activity during the relevant financial period and that are not exempt from the Regulations are required to demonstrate economic substance in the UAE and file an economic substance return. Economic substance returns must be filed within 12 months from the end of the relevant financial period.

Any penalties for non-compliance?

Penalties ranging from AED 10K to 300K may be applied for various non-compliance instances and Trade / commercial licence could be suspended, withdrawn or not renewed.

What Team Authentic Offers to its clients?

We at Authentic provides end to end bespoke accounting and tax solutions to our clients.  During this new phase of Regulations we help our clients in understanding and navigating through the whole process from the basic ESR testing to the Economic Substance Return.  For support please contact our office via our regular contact options, but in case you need personalized support please contact our relationship manager on +97156 5484635

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BUSINESS GROWTH: DIRECTLY RELATED WITH ACCOUNTS AND BOOKKEEPING

BUSINESS GROWTH: DIRECTLY RELATED WITH ACCOUNTS AND BOOKKEEPING

Good accounting can stimulate the growth of a company in ways more than one. An amalgamation of big-picture strategic thinking with detailed financial expertise can lead any organization, big or small, to achieve a steady rate of growth. Therefore, it is essential to hire an accounting firm, which is at the top of its game. Read on to know more about how a competent accountant can contribute to the growth of your company and how you should select one!

Benefits of Outsourcing Accounts and Bookkeeping Services

  • Ensure Productivity of the Company Owners: The owners of the company can concentrate on growing their company rather than being involved in maintaining the account books and keeping a track of the financial expenses. They can focus on increasing their company’s manufacturing capacity, hire better, more proficient man-power, using better machinery for better finished goods and ability to generate new idea, which will fruitful for company’s growth and prosperity.
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Selecting the Service Provider

Once you are convinced that you need a specialized company to handle your bookkeeping and accounting needs, you need to following:

  1. The first step is to check the past record of the firm, which is usually done by relying on the customer’s reviews. The same gives you a greater insight of the software and program they use for accounts and book keeping, efficiency of the staff members, their capacity to meet the deadlines and most importantly, their sincerity toward work. The reviews from previous customers of a company also help in finding about the accuracy of their service because they are true and unbiased.
  2. Another important deciding factor is the qualifications of the accountants of any firm. The professionals must possess the required certifications, which would ensure that they are capable enough of doing their job well.
  3. The most essential point is the budget that you have set for these services. The accounting firm you intend to hire must offer its services at the budget set by you.

Final Words:

Every business owner wants his organization to flourish and hiring a top-rated accounting firm can definitely drive your business toward fast-paced growth. If you are looking for Accounting and Bookkeeping Services in Dubai, get in touch with Authentic Accounting and Bookkeeping LLC, which is a renowned name in the field.