Economic Substance Regulations (ESR)
The Economic Substance Regulations (ESR) regulations require certain businesses in the UAE to maintain and demonstrate adequate economic presence in the UAE in respect of the activities carried out. The goal is to ensure that UAE’s businesses report income that is proportionate with their economic activities in the UAE.
The Economic Substance Regulations is introduced by the UAE as part of its commitment as a member of the Organization for Economic Co-operation and Development (OECD) Inclusive Framework and in response to an assessment of the UAE’s tax framework by the European Union Code of Conduct Group on Business Taxation.
Economic substance regulations (ESR) compliance is to be done for every financial year. Companies are required to do an assessment of their activities and transactions for each financial year and take action accordingly for the filing requirement with the UAE Ministry of Finance (MOF)