Insights
Economic Substance Regulations (ESR)

Economic Substance Regulations (ESR)

UAE has issued resolution in connection with Economic Substance Regulations last 30th April 2019 as a part of UAE’s efforts to comply with global standards that aim to combat harmful tax practices. The Regulations require companies and other business forms registered in the UAE that are conducting “Relevant Activities” to demonstrate their economic substance here in the UAE and to comply with notification and reporting requirements to their Regulatory Authorities as set in the Regulations.

As a part of the new Regulation, DMCC, the UAE's largest free zone, has already issued a notification template to be followed by all member firms to comply with their Economic Substance Regulation ("ESR") filing obligations. As expected, the notification will be electronic, via the free zone's member company portal.

Elsewhere in the UAE, other Authorities have also communicated on their ESR Notification procedure.

ESR Relevant Activities

  • Banking Business
  • Insurance Business
  • Fund Management Business
  • Financial or Leasing Business
  • Intellectual Property
  • Headquarters Business
  • Shipping Business
  • Holding Company Business
  • Distribution and Services Business

Note: Including Irrelevant Activity which needs to be notified.

Deadline for Notification Under ESR

Authority Name Notification required Notification deadline Summary/ Guidance
Fujairah Creative City Yes 31st July 2020 All entities/ licensees, including those who do not undertake relevant activity
Dubai International Financial Centre (DIFC) Yes By 30 June 2020 (extended from 12 June 2020) All entities/ licensees, including those who do not undertake relevant activity
Dubai Multi Commodities Centre (DMCC) Yes 30th June 2020 All entities/ licensees, including those who does not undertake relevant activity
Abu Dhabi Global Market (ADGM) Yes 30th June 2020 Applicable to all licensees carrying out a Relevant Activity, located in ADGM and whose financial year commences on or after 1 January 2019.
Dubai Airport Free Zone Authority (DAFZA) Yes By 31 May 2020 (extended from 3 May 2020) All entities/ licensees, including those who do not undertake relevant activity
Ras Al Khaimah Economic Zone (RAKEZ) Yes 30th June 2020 All entities/ licensees, including those who do not undertake relevant activity
Dubai World Trade Centre (DWTC) Yes 30th June 2020 Only entities/ licensees that are carrying out relevant activity
Jebel Ali Freezone (JAFZA) Yes 30th June 2020 Only entities/ licensees that are carrying out relevant activity

8 Jun 2020

Alyssa Marie Pamiloza

Certified Public Accountant