ESR UAE- Alert call for ESR submission for Financial Year 2020 & 2021

ESR UAE- Alert call for ESR submission for Financial Year 2020 & 2021

Annual ESR Report for FYE 31st Dec 2020:

All the Entities fulfilling the following criteria will require to file ESR Report by 31st December 2021:

• Having their financial year-end/ accounting period/ reporting period as 31st Dec 2020 
• Conducting Relevant Activity as defined under Economic Substance Regulation during the financial year/ accounting period/ reporting period
• Has earned revenue from the relevant activity
• Not claimed Exemption under ESR notification. 

Failure to file the ESR report within the due date will attract a penalty of AED 50,000/-.

ESR Report is an annual requirement. Every year the entity needs to carry the assessment to identify whether it is conducting relevant activity & also ensure that the substance is met in the UAE. 

Assessing & proving that the Substance Test is met in the UAE:

If the entity is required to submit the ESR report then it is very important to assess that the substance test is met in the UAE. Below are the parameters of the Substance test:

• Core Income Generating Activity is conducted in the UAE
• Having adequate no. of qualified full-time employees
• Having adequate premises in the UAE
• Having sufficient physical assets in the UAE
• Business directed & managed in the UAE
• Supporting documents in case of COVID impact in meeting any of the above parameters

Failure to meet the substance test will result in a penalty of AED 50,000/- for the first time and it may go up to AED 400,000/- for subsequent failure.

ESR Notification for FYE 30th Jun 2021:

All the companies having their financial year-end/ accounting period/ reporting period as 30th June 2021 and conducting a relevant activity, will require to file ESR notification by 31st Dec 2021. Failure to meet the deadline will attract a penalty of AED 20,000/-.

We Emirates Chartered Accountants Group have a specialized team on the Subject to support and guide you on the Compliance with Economic Substance Regulation. Please feel free to reach us on the Subject.

For any enquiry you can reach out:

CA Manu Palerichal, FCA, CMA  
+971502828727                
manu@emiratesca.com                  

CA Dhara Yagnik, M.Com, ACA
dhara@emiratesca.com
+971565956836