As we approach the Economic Substance Regulations (ESR) compliance deadline on March 31st, 2024, for businesses and companies, we want to ensure that all our partners and clients are well-prepared and informed about their responsibilities under these regulations.
What is ESR Compliance and Who Does it Apply to?
ESR Compliance refers to the set of regulations in the UAE. These guidelines apply to companies and businesses engaging in specific activities. These activities include:
- Insurance Businesses
- Banking Businesses
- Investment Fund Management Businesses
- Headquarters Businesses
- Lease-Finance Businesses
- Holding Company Businesses
- Shipping Businesses
- Intellectual Property Businesses
- Distribution and Service Centre Businesses
For companies, it’s imperative to determine whether or not they engage in any of the relevant activities during the financial year. If yes, it is necessary to comply with the ESR Compliance norms.
- Issue an ESR Notification within 6 months from the conclusion of the financial year
- Undertake an ESR evaluation and present the report to the relevant authority within 12 months from the conclusion of the financial year
Have a look at the due dates for businesses having these financial years:
| Financial year ending | Due date of notification | Return due date |
|---|---|---|
| September 30, 2023 | March 31, 2024 | September 30, 2024 |
| March 31, 2023 | September 30, 2023 | March 31, 2024 |
Non-compliance with the regulations will attract the following penalties to the businesses.
| Non-Compliance | Penalty (Amended amount in AED) |
|---|---|
| Not submitting a notification | 20,000 |
| Not submitting an economic substance report | 50,000 |
| Furnishing wrong information | 50,000 |
| Failure to clear the first year’s ET Test | 50,000 |
| Failure to clear the consecutive year’s ET Test | 400,000 |
Have a Consultation Today
Don’t wait until the last minute. Reach out to us today to ensure your ESR Compliance is on track and avoid potential penalties or disruptions to your business operations. Our professionals will carry out an assessment and help you file the ESR Report within the stipulated timeframe.
Thank you for trusting IMC Group as your reliable partner amidst the dynamic regulatory landscape.
