The UAE has introduced Economic Substance Regulations (ESR) to combat harmful tax practices and boost tax transparency. This move underscores the UAE’s commitment as a member of the OECD Inclusive Framework on BEPS (Base Erosion and Profit Shifting).
As a result, mainland, offshore, and free zone companies in the UAE must demonstrate adequate economic presence within the country. Businesses conducting relevant activities are required to annually submit the ESR notification and report to the authority.
Failure to comply with ESR requirements in the UAE will result in hefty administrative penalties. Keeping track of ESR deadlines is essential to avoid penalties and other consequences.
Top ESR consultants in Dubai can assist you in meeting ESR notification and reporting deadlines. This blog serves as a quick guide to help you meet ESR deadlines in the UAE:
Understanding the UAE ESR Compliance Requirements
Before focusing on deadlines, it is crucial to understand the mandatory obligations under the UAE ESR Law. Given the strict handling of compliance failures, businesses are advised to seek assistance from leading ESR advisers in Dubai. Here are the critical ESR obligations in the UAE:
ESR Notification
A notification must be submitted within six months from the financial year (FY) end, declaring that the company conducts a relevant activity, regardless of whether the licensee is exempt from the ESR or income was generated from the relevant activity.
The nine relevant activities are:
- Banking Business
- Insurance Business
- Investment Fund Management Business
- Lease-Finance Business
- Headquarters Business
- Shipping Business
- Holding Company Business
- Intellectual Property Business
- Distribution and Service Centre Business
Economic Substance Test
Businesses must demonstrate sufficient economic substance in the UAE.
Reporting
ES Reporting is an annual submission of financial information and other relevant details. It must be submitted within 12 months from the end of the FY, but only if income was earned from the relevant activity and the licensee was not exempt from the ESR. ESR consultants in the UAE can assist with the report submission.
ESR Notification and Reporting Deadlines 2024
The table below illustrates ESR notification and report submission deadlines in the UAE:
| Financial Year End | Notification Filing Deadline | Report Filing Deadline |
|---|---|---|
| 31st December 2023 | 30th June 2024 | 31st December 2024 |
| 30th June 2023 | 31st December 2023 | 30th June 2024 |
Penalties for Not Meeting ESR Deadlines in the UAE
Entities that fail to submit an ESR notification will incur an administrative penalty of AED 20,000, and AED 50,000 for failing to submit the ESR report. Leading ESR advisers in the UAE can help you meet these obligations within the deadlines.
Steps to Meet ESR Notification & Report Deadlines
Business owners should take the following steps to ensure they submit ESR notifications and reports on time:
- Conduct a self-assessment to determine if ESR obligations apply.
- Determine the extent of the ESR reporting obligations.
- Assess any changes in the business since the last financial year.
- Ensure the timely completion and submission of relevant ESR documentation if there have been any changes.
Hire the Best ESR Advisers in Dubai, UAE
Considering the hefty penalties, it is advisable to engage the expertise of reputed ESR consultants in Dubai, such as Maats Accountants and Consultants, to ensure complete compliance. Our qualified ESR experts in the UAE can help companies assess their ability to meet the UAE Economic Substance Test, provide recommendations if they fail to meet the ESR test, and assist with the accurate filing of the annual ESR notification and ESR report.
Maats Accountants and Consultants can also assist with filing an appeal in case of penalties and manage any necessary correspondence with the Federal Tax Authority (FTA). As one of the leading providers of ESR compliance services in the UAE, Maats Accountants and Consultants can help companies properly assess their applicability and file annual notifications and reports. We also provide ESR penalty appeal services in case any penalty is incurred. Contact us today to ensure ESR compliance at affordable rates.
