Compliance with Economic Substance Regulations in UAE Made Easy
Introduction to Economic Substance Regulations UAE
The Economic Substance Regulations (ESR) were initially introduced in the UAE in April 2019 through Cabinet Resolution No. 31, later amended by Cabinet Decision No. 57 and updated guidance (Ministerial Decision No. 100 of 2020) in September 2020. ESR mandates that all UAE companies engaging in ‘Relevant Activities’ must establish and demonstrate substantial ‘economic presence’ in the UAE, as assessed by the ES Test.
For companies involved in ‘relevant activities’ and generating income from them, it is mandatory to submit an annual ES Notification within six months from the end of the relevant financial period. Additionally, these companies must furnish a comprehensive ES Report within 12 months from the conclusion of their fiscal year.