On 30 April 2019, the UAE enacted the ESR in Resolution No. 31 of 2019. 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. And 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.
The updated ESR states a change in the definition of the Licensees. It now applies to any corporate (within or outside UAE) or any unincorporated partnership conducting relevant activity. Previously, sole proprietors, trusts and foundations also were in the ESR scope, but they are no longer included in the definition of licensees.
The new exempted categories from the ESR notification include:
- Investment funds
- Entities owned entirely by UAE residents, and are not a part of any MNCs, and carry out activities ONLY within the UAE.
- Entities that pay taxes outside of the UAE.
- Branches of foreign parent companies where the income is taxed outside of the UAE.
With the current exemptions, come some changes to the ones that were previously exempted. Government entities are no longer exempt from ESR notifications. Unless they fall in one of the above scopes – they must comply with the updated ESR Dubai rules.
For companies that are outside the UAE but have relevant business operations in the UAE need to evaluate the impact of the updated ESR guidelines on the previous analysis.
It would be advisable to consider and evaluate the impact of the updated ESR on your business and understand if you need to submit or re-submit your Economic Substance Regulation Notification. If you need any assistance for ESR filing in Dubai, get in touch with TRC Pamco, one of the best audit firms in Dubai.
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