The Economic Substance Regulation (ESR) in Dubai has significant implications for businesses operating within the emirate. As a leading chartered accountants firm in Dubai, we offer comprehensive advisory services to help you understand, comply with, and leverage the opportunities presented by the ESR.
Economic Substance Regulation (ESR) Advisory
The UAE established the Economic Substance Regulation (ESR) as a regulatory framework to guarantee that businesses engaged in specific Relevant Activities have a significant economic presence in the nation. These rules bring the UAE into compliance with both the OECD’s Base Erosion & Profit Shifting (BEPS) framework and international tax transparency requirements. Both mainland and free zone businesses are subject to ESR.
Only businesses engaged in certain Relevant Activities are required to adhere to ESR. Among them are:
- Banking and insurance businesses
- Investment fund management
- Lease-finance and headquarters businesses
- Shipping and holding company businesses
- Intellectual property business
- Distribution and service-centre business
Companies conducting other activities are generally not subject to ESR compliance.
Under ESR, businesses must pass the Economic Substance Test, which entails:
- Direct and manage the business from the UAE.
- Ensure that core income-generating activities take place within the UAE.
- Maintain sufficient local staff, physical assets, and operating expenses.
To comply with regulatory requirements, companies should also maintain a quorum of directors, hold board meetings locally, and record minutes.
RVG Chartered Accountants provides professional ESR advisory services, including:
ESR assessment to determine if your business falls under the regulations
Preparation and filing of ESR Notifications and Reports
Substance-gap analysis to address areas of non-compliance
Guidance on record-keeping, board minutes, and UAE-based governance
Updates on regulatory changes to keep your business compliant
