As a member of the Organization for Economic Co-operation and Development (OECD) Inclusive Framework, and in response to an assessment of the UAE’s tax framework by the European Union Code of Conduct Group on Business Taxation, the UAE issued Economic Substance Regulations. The objective is to avoid harmful tax practices and to prevent such low-tax jurisdictions in attracting profits from certain mobile activities without corresponding economic activity.
The Economic Substance Regulations requires UAE onshore and free zone companies and certain other business forms that carry out certain activities to maintain and demonstrate an adequate “economic presence” in the UAE relative to the activities they undertake. The purpose of the regulations is to ensure that UAE entities report actual profits that are commensurate with the economic activity undertaken within the UAE.
At AMA, we provide you with various ESR services, such as:
• Assess status of the businesses under ESR framework and its activity.
• Submit notification with the Ministry of Finance (MoF).
• Prepare and submit the ESR Report with the MoF.
• Provide advisory services on formulating substance, testing the activities, ESR documentation, GAP analysis.
• Review and submit appeals for penalties.