Scope of the New ESR Update - Key Changes & Requirements

 The UAE had announced Economic Substance Regulations in April 2019, and have updated it since then, and it is imperative for businesses in the UAE to be aware of the same.

First, who is eligible to hire a ESR filing company in Dubai?

Any natural or juridical person licensed by a competent licensing authority in the UAE (licensee) that carries out any relevant activity is subject to the ESR. On 11 September 2019, the United Arab Emirates (UAE) issued Ministerial Decision No. 215 of 2019 containing guidance for businesses on compliance with the Economic Substance Regulations (ESR), enacted in April.

What are the key updates?

• Initially, government entities were exempt from ESR, but as per updated rules – they also must comply with the updates ESR regulations.

• Offshore companies who operate in the UAE through branch offices, and the ones that concluded they carried out relevant activity of distribution and service center business – will have to verify the impact of the updated ESR on their previous analysis. Previously, for any entity to fall under the scope of Distribution & service center business, goods had to be stored in the UAE, not anymore though.

• Offshore companies conducting relevant activity through a branch in the UAE do not need to show economic substance, provided the relevant income is subject to tax in the jurisdiction where the company is formed.

• All the entities need to now verify if the analysis they conducted under the previous economic substance regulations still hold accurate with the updated regulations.

• If any UAE entity falls under the updated Economic Substance Regulations, they need to re-submit their economic substance notification through the finance portal of the UAE ministry, once available.

To know more about ESR filing companies in UAE, check out TRC Pamco. They have a team of professionals who can guide you through the process and file your Economic Substance Regulations in compliance with the updated rules.