Economic Substance Regulations

About Economic Substance Regulations

Farahat & Co has dedicated Regulatory and Risk Advisory experts that can offer you with legal advice in connection with UAE Economic Substance Regulations. Our team is committed in providing solutions that enable clients that are affected by the legislation to satisfy the requirements for sufficient substance in United Arab Emirates, including annual reporting and notification filing. Economic Substance Regulations (ESR) are laws implemented to ensure that companies engaged in certain activities in a jurisdiction have substantial economic presence there. These regulations were introduced by the UAE to align with global standards set by the OECD and EU, aiming to prevent harmful tax practices. Under ESR, companies must demonstrate genuine business operations in their jurisdiction, such as having adequate staff, offices, and expenditures. The regulations apply to various sectors, including banking, insurance, intellectual property, and shipping. Non-compliance can result in penalties and increased scrutiny, making it essential for businesses to meet these requirements to maintain their legitimacy.