All the entities holding a trade for the UAE (particularly the free zone and offshore entities) must notify their concerned Regulatory Authorities regardless of whether they are carrying out the Relevant Activities within the UAE. Aside from informing the Relevant Activities to the Regulatory Authority, providing the information with reference to the Licensee also serves as the primary purpose of the ESR Notification. Therefore, all the information provided in the ESR Notification is highly required in filing the Economic Substance Report for the same period.
An entity conducting more Relevant Activities is regarded as a "Licensee."
The filing of the ESR Notification is a must for those entities carrying out the Relevant Activities within the UAE during the relevant Financial Year. These entities include:
An entity may carry out a Relevant Activity for part of the year. Nevertheless, the Licensee must notify the Regulatory Authority of all relevant activities performed during the financial year, regardless of whether those activities are conducted throughout the year.
Parent companies and head offices in the UAE are responsible for notifying their Regulatory Authority about their Relevant Activities and the Relevant Activities of their UAE branches. Accordingly, there is no difference between whether or not the UAE parent company is performing Relevant Activities.
For the UAE parent company/head office, it is their obligation to notify their Regulatory Authority regarding their Relevant Activities as well as the Relevant Activities of their UAE branches. This is applicable regardless if the UAE parent company/head office is carrying out their own Relevant Activities or not.
Licensed entities in the process of liquidation which may perform relevant activities in the year of liquidation must file their ESR Notifications and Economic Substance Reports (if applicable) for the period up to liquidation.
The Notification must be filed within six months from the Licensee's financial year-end.
* For Example, If your Financial year ended on 31 December 2021, you need to file your ESR Notification by no later than 30 June 2022.
If the Licensee or Exempted Licensee failed to submit the Notification before the deadline, the Licensee is subject to an administrative penalty of dirhams twenty thousand (AED 20,000).
If the Licensee or Exempted Licensee provides inaccurate information to the Regulatory Authority or the National Assessing Authority and knows of the inaccuracy at the time the information is provided but fails to inform the authorities, as mentioned earlier means the Licensee or Exempted Licensee is subject to a penalty amounting to dirhams fifty thousand (AED 50,000).
To comply with ESR, AMCA will help you prepare your ESR Notification, which must be shared with the Authority. AMCA will handle all the processes for filing your ESR Notification for you with confidentiality, integrity, and a timely manner.
