Economic Substance Regulations (ESR)
UAE rules ensuring entities demonstrate real economic activity locally.
Detailed Description
Economic Substance Regulations (ESR)
What are Economic Substance Regulations (ESR)?
ESR are rules requiring business entities to show substantial economic activity in their operating jurisdiction to prevent tax avoidance.
What is the main purpose of ESR?
The main purpose of ESR is to combat base erosion and profit shifting (BEPS) by ensuring profits are taxed where economic activities occur.
What are the key components of ESR?
Key components include covered activities, substantial activities requirement, and documentation and reporting obligations.
Who must comply with ESR?
Various entities, including corporations, partnerships, and limited liability companies engaged in relevant activities, must comply with ESR.
What are the penalties for non-compliance with ESR?
Penalties can include financial fines, reputational damage, and potential restrictions on business operations.