Banks have tightened their policies and countries now permit fewer tax planning schemes. This is the reality of modern day constraints on business. One effect is to oblige business owners to demonstrate that they fulfil the requirements of economic presence and that the center of business management and control is within the country. SORP Group will help you avoid financial, legal and tax risks by providing a comprehensive solution.
International business activities thatrequire ESR compliance in the UAE
Sale of goods, warehouse management,consulting or administrative services and service centers.
Banks, credit institutions or insuranceactivities, management of investment funds or securities.
Any business structures designed foreffective management and optimization of international business fall under ESR.
Conducting any global projects: establishing,managing, supporting, financing a business from the UAE.
Registration and management of intellectualproperty (IP): patents, trademarks, including copyright.
Transporting goods by land and sea, aswell as forwarding, support and dispatch services.
Companies subject to the ESR conditions must pass a special test for compliance with the requirements of economic presence in the UAE. That involves submitting an annual report to the regulatory body within 12 months following the end of the previous financial period. Usually, regulators are empowered to independently establish the form such a report must take and the procedure for its submission, depending on the type of activity and place where the business is registered.
Steps to be taken in order to comply with the ESR requirements:
Confirm business accommodation inthe UAE through leasing or purchasing an office, commercial premises and/or warehouse with a mandatory address registered at the place of business
Ensure that a sufficient number of fulltime staff members are on the books. The size of the businesses determines how many people should be employed by the company
A local phone number, a website with aUAE domain (.ae) that is hosted within the country, confirmed postal address, actively sending or receiving business correspondence
Local decisionmaking center
Proof that management and control ofthe business is centered in the UAE, as well as keeping minutes of regular and occasional meetings of shareholders that take place in the UAE
Ensuring continued ESR compliancerequires companies to maintain high bookkeeping and accounting standards and file annual financial reports for UAE activities, depending on requirements
Obtain a tax residency certificatewith quarterly filing of tax returns to country's fiscal authorities in order to confirm the requirements of the UAE regulators
SORP Group has the government licenses as well as its own resources and tools that will help your business comply with the ESR requirements exactly in accordance with UAE legislation - without incurring large financial costs. SORP also provides a guarantee that there are no legal or tax risks.
ESR regulations, that a foreign investor needs to know:
By understanding the nuances of the UAE business environment and global trends in confirming economic presence, you can avoid the risks of recognizing your activity as illegitimate and protect yourself from the consequences of sanctions from state and fiscal authorities.
ESR enforcement agencies
Federal Tax Authority
Ministry of Finance
Abu Dhabi Global Market
Dubai International Financial Center
Dubai Multi CommoditiesCenter
Ras Al Khaima ICC and Free EconomicZone
Solutions by SORP Group that will help yourbusiness meet the UAE’s ESR requirements
Provision of director with limitedrights who is a UAE resident, so as to confirm the presence of the executive body in the country
Administrative, secretarial, legal,PRO support, IT services. SORP can also provide qualified staff on an outsourced basis
Offices for rent in SORP BusinessCenter specifically for passing KYC procedures or confirming economic presence in the UAE
Tax residency status
Assistance in obtaining a taxdomicile certificate as proof of the compliance with the requirements of affiliation to the UAE
Preparation of audit reportsand support in matters of filing tax returns, and assistance with tax registration in the UAE
Legal support for changing thejurisdiction of registration of a foreign company to the UAE, a country with a unique taxes
Branches of foreign organizations that carry out controlled activities and receive the corresponding income also fall under the regulation, with the exception of cases when income is taxed outside the UAE. In addition, the parent company or head office registered in the Emirates is also subject to ESR regulations and must notify the regulator of the economic activity for itself and its branches in one report.
Risks of non-compliance with the requirements for confirming economic presence in the UAE
Difficulty in opening a bankaccount
Impossible to pass KYC procedures required to open a bank account and confirm that business operations are active in the UAE
Financial penalties andimpact on trading
Failure to comply with the ESR canresult in severe penalties and sanctions such as the revocation of trade licenses or permits
Risk of losing taxincentives
Spontaneous exchange of informationwith foreign tax authorities, application of normal tax rates to all income, also from abroad, interest charged
Transactions considered asbeing fictitious
This issue depends on recognition andacceptance (or not) of tax optimization schemes or transfer pricing
Loss of the company’s taxresidency status
The company will be taxed basedon the locations where it has earned revenues
Loss of businessconfidentiality
Disclosure occurs as per the CRSregulation - tax data is sent to the country of residence
SORP is your reliable partner for the long haul -helping your business succeed in the UAE
SORP offers comprehensive support for acquired companies and their shareholders: from licensing, maintaining Bank accounts to obtaining the status of a tax resident of the country
Your requirements are unique. That is why we treat every business individually to tailor the right services to achieve your priorities.
15 years of successful work
We have helped thousands of clients acquire, build and develop businesses in the UAE
Assistance in choosing a bank that is suitable for your purposes, support with bank accounts opening and passing KYC procedures (know your customer).
Confirm that yourbusiness is managed from the UAE
SORP experts keep up to date with global trends and constantly monitor changing requirements of local legislation and international standards.
Take the first step today on the path to creating a successful business in the Emirates!