Knowing Economic Substance Regulations (ESR) and How They Affect Companies

Thu, 06 Feb 2025 12:19:09 +0000

A series of rules implemented by several countries, including the UAE Economic Substance Regulations (ESR), guarantee that businesses involved in specific operations show actual economic presence in the nation. These rules aim to counteract negative tax policies, including profit shifting and base erosion, thereby guaranteeing that taxes are paid where the economic activity really occurs. To avoid fines or being labeled tax evaders, ESR requires companies in industries including banking, insurance, and intellectual property to have a physical presence, local personnel, and significant activity in the UAE.