An In-Depth Step-by-Step Guide to ESR Compliance For Dubai Businesses

Dubai, the country known for its business-friendly policies, adherence to protocols, and high-tech infrastructure, has a global outreach, and the list can go on and on. Thousands of points prove to us right when we say business setup in Dubai is the wisest decision one can make. Make My Firm is a leading company formation in Dubai that assists businessmen in their business setup journey. We have been in Dubai for more than a decade and have assisted many entrepreneurs with their license procedure, company formation, mainland business setup, and much more. We have a 90% success ratio when it comes to client satisfaction.

As a leading expert business consultant firm, we recommend everyone strictly adhere to the government compliances. Business setup in Dubai also means adhering strictly to the government compliances when you are starting your business. One of the government rules is ESR. Today, this blog will assist you with what ESR is and a step-by-step ESR compliance process for entrepreneurs in Dubai.

Let’s understand what ESR is and the step-by-step compliance process.

What are Economic Substance Regulations?

The UAE government introduced the Economic Substance Regulation in 2019. The goal behind ESR is to meet international tax standards. Additionally, ESR ensures that businesses in the UAE have genuine economic activities in Dubai. If you are someone planning a business setup in Dubai, then you must know what ESR is and adhere to the rules as well.

If you are thinking of company formation in Dubai and your business focuses on areas such as banking, insurance, shipping, investment fund management, intellectual property activities, holding company activities, lease finance, headquarters activities, distribution, and service centers, then you must adhere to ESR compliance. If you don’t apply for ESR, then you have to face some serious situations, such as significant penalties, license suspension, reputational harm, or anything unpleasant.

Step-by-Step Guide for ESR Compliance

• Assess Applicability: The first step is you have to find out whether your business activity falls into the ESR compliance or not. Let us navigate you here: You can review your last financial year’s operation, and you can find out whether you have to fall under the ESR compliance or not. If you are not sure about what to do, then you can call Make My Firm or any other professional company, and we will assist you thoroughly.
• Maintain Core Documentation: To submit your annual ERP documentation, you have to follow the documentation process and keep all the necessary documents handy. Here is a list of all the documents you will require for filing your ESR.
• Financial Statements
• Employment Contracts for staff located in the UAE
• Lease agreements of office premises
• Board meeting minutes conducted in the UAE
• Annual ESR Notification: You have to file an ESR notification every year. You have to file it even if you don’t generate the relevant income. Additionally, you have to file the ESR before the six months of the financial year end.
• Economic Substance Test: The next step is the economic substance test. You have to submit documents that your entity is directed and managed in the UAE. Additionally, you must have a physical presence, sufficient employees, and annual expenditure in the UAE. Also, all these things must align with your activities. Try to have all the related documents that support your submitted documents.
• Annual ESR Report: Now, you have to submit your annual ESR report to the Ministry of Finance ESR portal. You have to submit this within 12 months of your financial year end. This annual report outlines the compliance with the substance test and details of your business structure and some other information.
• Respond to Audit or Review: As you have submitted all the documents for your ESR, you have to wait for your review. Additionally, the Ministry of Finance can opt for additional documents. So, we suggest you keep all the documents in a safe place.
• Seek Professional Help: You can always opt for professional advice if you feel overwhelmed by all the procedures. Make My Firm always assists you with all financial services. We are one of the best business consultants in Dubai.

We hope this step-by-step process assists you with your ESR compliance. If you ever get confused or stuck anywhere, you can reach out to us.

Now, let’s read about the penalties one has to face if they don’t comply with ESR.

We know that you never want to file for these penalties, and hence, we recommend you follow the strict adherence to ESR Compliance.

Conclusion

Business setup in Dubai, is a seamless task with a business setup company. At Make My Firm, we are recognized as expert business consultants that assist entrepreneurs with their taxation services, auditing and bookkeeping services, branch office setup, visa permits, employment visas, and everything. Reach out to us +971526739777 and we will assist you with your queries.