ESR Reporting & Filing

Entities Subject to ESR Reporting:

An Economic Substance Report must be filed by any entity that is not an Exempted Licensee and derives Relevant Income from the following Relevant Activities during a Reportable Period:

• Banking Businesses
• Insurance Businesses
• Investment Fund Management Businesses
• Lease-Finance Businesses
• Headquartered Businesses
• Shipping Businesses
• Holding Company Businesses
• Intellectual Property Businesses
• Distribution and Service Centre Businesses

Filing Deadline and Consequences of Non-Compliance:

The Economic Substance Report must be filed within 12 months from the Licensee’s financial year end. Non-compliance with this obligation is subject to a penalty of AED 50,000 and can result in the Licensee being deemed to have failed the Economic Substance Test for the relevant Financial Year.

Economic Substance Test Criteria:

To meet the Economic Substance Test in relation to any Relevant Activity, a Licensee that is not an Exempted Licensee must satisfy the following criteria:

(a) Conducting Core Income-Generating Activity: The Licensee conducts the necessary Core Income-Generating Activity in the UAE.

(b) Direction and Management in the UAE: The Relevant Activity is directed and managed in the UAE.

(c) Criteria Adequacy: Having regard to the level of Relevant Activity:

• (i) Adequate Number of Qualified Full-Time Employees: There is an adequate number of qualified full-time employees physically present in the UAE.
• (ii) Adequate Operating Expenditure: There is adequate operating expenditure incurred by the Licensee in the UAE.
• (iii) Adequate Physical Assets: There are adequate physical assets in the UAE.