What is an ESR report?
The Economic Substance Regulation requires enterprises that engage in relevant activities to satisfy specific requirements in order to pass the Economic Substance Test. Companies should first file their taxes and then submit the Economic Substance Report to the appropriate regulatory body. It is recommended to use the services of certified tax advisors in Dubai to have an in-depth knowledge of the Economic Substance Regulation and to adhere to the rules and standards of the Federal Tax Authority.
When must businesses submit an ESR report?
Businesses must submit an ESR report for each and every financial year that they carry out a relevant activity. After a financial year ends, businesses have 12 months from the conclusion of the relevant financial year to prepare and submit the financial ESR report. This is the deadline set forth by the law that regulates economic substance regulation in the United Arab Emirates. Businesses must submit the report within the allotted time frame via the FTA online portal.
What details shall be included in the ESR report?
Provide your basic details, including the branch: The licensee’s name, license number, nickname of the licensing authority, name of the regulating authority, permanent place of establishment, office name, office nation, full office address, legal forms, and premises must all be provided in this section.
Select your Financial/Reportable Period: You must include the beginning and ending dates of the fiscal year that you are reporting in this section. Keep in mind that you can only refer to the completed fiscal year when mentioning the beginning and ending dates of the current one.
Respond to a query regarding current information: You must indicate in this part if the notification form you have already submitted differs in any way from the questions listed above. If you answer “yes” to this, you will have to give an explanation.
Give details: Provide details about the pertinent activities that your company carries out.
Complete the declarations: You must attest in declarations that you have sufficient financial resources, sufficient expenditures, and sufficient numbers of competent workers. In addition to the required financial statements, you have the option to attach other documents.
Check out your form: After completing your form accurately and thoroughly, you can click the preview button to give it one more look before submitting it.
Who is exempt from filing a report?
The following types of entities must still file a notification even when they are not required to file a report:
(i) Businesses that are fully owned by citizens or residents of the United Arab Emirates, do not belong to a multinational corporation, and only conduct business there
(ii) Funds for investments
(iii) Investment holding companies for investment funds or special purpose vehicles
(iv) Organizations having tax residence outside of the United Arab Emirates
(v) foreign firm branches when the parent company’s jurisdiction applies taxes to the branch’s profits
Conclusion: Companies should use certified ESR consultants in the UAE to ensure they fully comprehend the Economic Substance Regulation and adhere to all rules and guidelines set forth by the Federal Tax Authority.