Ensure your business meets the UAE Economic Substance Regulations (ESR) with BMS Auditing. Our experts offer comprehensive ESR compliance services, including notifications, returns, structuring, and more.
The UAE's ESR is related to the adverse effects of tax practices and siphoning off profits to jurisdictions with low or no tax. ESR ensures companies conduct genuine economic activities in the UAE and not merely benefit from the UAE's tax avoidance attributes. For any kind of business engaged in such activities, compliance with ESR would be compulsory. Failure to adhere to it would attract fines or reputational damage. BMS Auditing helps your business enjoy professional advice and support to fully meet all ESR requirements in the UAE.
The UAE government introduced the Economic Substance Regulations (ESR) aimed to suppress tax evasion and avoidance practices normally exerted by MNCs. Such practices include shifting profits to countries with little or no tax, although they carry out their core activities elsewhere. That is why the ESR ensures that businesses carrying on operations in the UAE are undertaking substantial activities within it and contribute to the economy of the country.
This means that businesses operating in certain lines of business must demonstrate they have a real presence in the UAE and are not merely routing profit through the country as a tax haven from more significant taxation elsewhere. ESR compliance shows anyone analyzing your company's activities that it is carrying out income-generating activities in the UAE and paying taxes accordingly.
What is ESR Compliance?
ESR compliance means that the business must meet several demands set by the UAE to prove it carries out relevant economic activities within that jurisdiction. The above-mentioned activities must relate to income-generating processes, and the businesses must establish and prove an appropriate substantive level in the UAE. After these requirements have all been passed, the business submits different types of ESR notifications and ESR returns every year.
The ESR was put into force in April 2019 based on the decision by Cabinet of Ministers Resolution No. 31 of 2019 and further detailed in Ministerial Decision No. 215 of 2019. In this, a wide category of activities comes under its scope, like banking, shipping, holding companies, intellectual property, and more. Non-compliance may lead to fines and other punishments for parties.
Activities Covered by ESR in UAE
Economic Substance Requirements: ESR applies concerning any business carried on within the UAE for which a taxable income is generated. The following are some examples of business included:
- Banking and insurance
- Shipping companies
- Holding companies
- Headquarter businesses
- Investment and fund managers
- Lease and finance businesses
- Intellectual property management
- Distribution and service center companies
The entities that undertake these types of activities need to prove to the ESR compliance standard that they have a substantial presence in the UAE. In other words, businesses will be required to prove that they are not only registered in the UAE but are also engaged in business within the borders of the UAE. Natural persons, sole proprietorships, trusts, or foundations are exempt from the regulations.
Here is our ESR Compliance Service:
BMS Auditing offers full services to ensure that your business remains fully compliant with ESR regulations. Our team of experts evaluates the current activities and assesses them to decide if it meet the set requirements for ESR compliance. Our ESR compliance services include:
- ESR Notifications and Returns: We guide you through the accurate and timely submission of ESR notifications and returns complying with annual reporting requirements.
- Analysis of the ESR Test: We guide you on whether your business is doing relevant activities under the ESR guidelines and whether you meet the relevant conditions.
- Document preparation: we walk you step by step through preparing the necessary documents to show the economic substance of your business activities in the UAE.
- Consulting on business structuring: Our business will consult you on how your business has to be structured to be fully ESR compliant in the UAE, and we shall initiate necessary changes.
- Avoiding penalties: Our business will explore ways of avoiding such fines and penalties arising from noncompliance with ESR in businesses, thus avoiding unnecessary costs and reputational damage.
Why Your Business Needs to Ensure ESR Compliance
If your business satisfies ESR requirements, it will save penalties, protect its reputation, and make meaningful contributions to the economy of the UAE. In this regard, ESR compliance also demonstrates that your business adheres to international standards in tax equity that support transparency and ethical business practices.
The Economic Substance Regulations leave no stone unturned to ensure that your organization builds great relations with clients, investors, and regulators of economic substance regulations. This builds your "corporate goodwill" and makes you stronger in the UAE market.
Why BMS Auditing for ESR Compliance?
At BMS Auditing, we are highly interested in providing businesses with professional advice concerning ESR compliance. Because of our extensive experience within the UAE tax terrain and ESR conditions, we ensure that your business not only complies but will also optimize its structures and operations for growth.
BMS Auditing provides:
- Full-cycle ESR compliance service: From initial assessment to the return filing, it takes care of the complete ESR compliance process.
- Professional advice: Our experts keep your business updated on the best ESR requirement currently.
- Customized solutions: We help different businesses of various types, suited to different kinds of industries, deal with their ESR obligations.
- On-time filings and accuracy: We keep you from being penalized as a result of failing to file on time.
Ensure that your business is compliant with the UAE Economic Substance Regulations and evasion penalty through BMS Auditing. Our skilled team is prepared to support you with every possible compliance process and more towards ensuring that your business and entity are perfectly compliant with the ESR in the UAE.
Contact us today for a consultation to see how we can help with your ESR needs in the UAE.
