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Economic Substance Regulations – Understand the Benefits Related to Different Business Categories

Spectrum is all set to offer you the much-needed UAE Economic Substance Regulations, which are well applicable to all the main firms registered in the Mainland of Free Zones or even within the Financial Free Zones all across UAE. These regulations are subjected to cover those firms, which are working as banking businesses, investment fund management, insurance business, shipping business, and more.

The UAE ESR is subject to companies, working under the:

  • Lease finance business
  • Headquarters business
  • Holding company business
  • Distribution and Service Center business
  • Intellectual property business

We have a vast source of blogs on ESR, which keep on getting updated daily to gain important information about the activities. Furthermore, you will understand what the Economic Substance Test stands for, who the licensee is and who is exempted from ESR. Equip yourself with maximum knowledge on ESR.

How Spectrum can help in the following business:

Depending on the business sector you are in, there are different points included within UAE ESR. Let’s get to learn about that in detail before you proceed further with the selection.

Banking business:

  • Helps to manage capital and prepare reports to investors or any government authority with functions, adjacent to supervision or regulations.
  • Known to offer loans, credit, or other financial services
  • Taking up hedging
  • Raising some funds, and also managing risks like currency, credit, and interest

Insurance firms:

  • Insuring against risk and offering insurance business services to underwriting insurance
  • Predicting and calculating

Investment fund management business:

  • Calculating risks and also deciding on currency or interest fluctuations
  • Taking decisions to hold and sell fund 
  • Preparing reports to be presented in front of the investors or any government authority with some functions, related to supervision

Headquarters business:

  • Working on major management services
  • Addressing operating expenditures 
  • Coordinating group

And there are more involved with Economic Substance Regulations under different business sectors like lease-finance business, shipping business, and more.

What is required for a better ESR registration?

UAE takes up the earning income from major economic activities in the financial year. This activity should be able to generate major income. 

  • Core activities that are not just directed but also managed from the UAE.
  • The team that notes down such core activities, should consist of qualified employees and premises.
  • Furthermore, it has an annual operating cost in the UAE, related to the major activities that generate income.

It is also possible for the chosen entity to carry not just one but various core activities at the same time. During that time, economic substance requirements will be needed to satisfy each of those activities, generating income.

There are different types of economic substance requirements needed, depending on the core activities. For example, you have pure holding firms, which are related to less stringent economic substance requirements. However, there are some added economic substance needs applied to the higher-risk IP-centric activities.

Why choose us for Economic Substance Regulations?

Even though the competition is tough, there are some solid reasons to choose us at Spectrum for covering your needs associated with Economic Substance Regulations. We are ready to offer end-to-end accounting and auditing services, along with varied business advisory services, all under one platform.

We can easily assess the entities and the activities, which are placed within the scope of revised economic substance rules. We further ensure that the entity gets benefitted from any exemptions in the chosen regulations. It is one significant step for businesses to determine what points to address under Regulatory Authorities and the right Economic Substance requirements. For that, visit our online site at Spectrum, where we help you explore all the possibilities with ease.  Reach out to us at +971 4 2699 329 for details!


What is ESR UAE?

ESR imposes requirements for UAE entities that will carry out and even earn income from any Relevant Activities to help maintain the economic substance in the UAE.

What do you mean by ESR in compliance?

According to ESR, every licensee that provides core activities to generate real income should go through Economic Substance Test. However, there will be some exempted cases.

What is the ESR report deadline?

Every entity will have around 12 months from next anniversary date after 1st July 2020 to complete first ESR report. The deadline for every subsequent year will be 12 months from the annual date of the entity.

Who needs to file ESR?

Local companies can apply for ESR in the UAE. It includes businesses within free zones and the ones engaged in “relevant activities.”

Who is exempted from ESR?

Licensees that carried Relevant Activity but fail to earn income from that activity within the reportable period are exempted from ESR in the UAE.

Spectrum offers end-to-end accounting and audit services, simplifying its client’s life by adopting to the emerging practices to provide its clients complete solutions. We specialize in a spectrum of services including Accounting, Auditing,Value Added Tax (VAT), Economic Substance Regulations (ESR), Mergers and Acquisitions (M&A), Company Formation and Liquidation, Country by Country Reporting (CbCR) and Business Advisory Services and other business services. Our magnitude of experience, competence and reputation makes us a distinctive world-class accounting service provider.

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