ESR Notification: Top Post-submission Issues and Solutions

The Economic Substance Regulations (ESR) came into effect in the UAE from 1st January 2019. From then on, companies that conduct the nine relevant activities in the UAE have been required to meet the ESR obligations, such as filing the ESR notification (for licenses & exempted licensees) and submitting ESR Report (only for licensees). Even though most companies are expected to be familiar with these annual compliance requirements, many companies encounter multiple issues after submitting ESR notifications or filing ESR Reports in the UAE.

This is the right time for the companies to address such challenges, as 31st October 2021 is the ESR notification deadline for companies whose financial year ended on 10th April 2021. Companies whose financial year ended on 31st October 2020 should also consider these guidelines as their ESR Report deadline 31st October 2021. ESR consultants in the UAE can help the companies resolve the issues they face after filing ESR report or ESR Notification in the UAE.

In the meantime, let’s dive into the common issues and challenges that the companies face after filing the ESR notifications & ESR Reports in the UAE. Read ahead.

1. Filing Economic Substance Notification Twice

The licensees and exempted licenses filed the ESR Notification twice as they found that their first filing was not reflected on the dashboard of the ESR portal.  The companies can avoid this mistake by saving the submission key or taking a screenshot of the same for future correspondence with the Federal Tax Authority (FTA). In case the first filing is not reflected on the dashboard, you can send an email to the FTA expressing concern over the issue rather than filing for the second time.

2. Economic Substance Report Appearing Twice on Dashboard

The licensees that file ESR notifications more than once face the issue of the ESR Report appearing twice on the dashboard. Companies usually file the ESR notification twice when the first notification doesn’t show on the dashboard, or there was an error and, instead of rectifying it, the companies submit a fresh notification. The dashboard will show the ESR report for the number of times you have filed the ESR Notification.

If you find errors in ESR notification, you must apply for amendments instead of submitting another notification. If you have submitted a fresh ESR Notification, mail the Authority to remove the previous one. A Licensee that submits two ESR notifications in the UAE will file only one ESR Report. The chances are high that the Authority may impose a penalty for not submitting the second ESR Report. ESR consultants in the UAE can help you apply for a penalty appeal if the Authority issues any fine on you. If appealed with adequate documents and proof, the National Assessing Authority (which is the FTA) will waive off the ESR penalties imposed on your company.

3. Authority Requesting you to Submit More Details

There are many cases where the FTA has asked the Licensees to submit additional details or information regarding the ESR Notification or ESR Report. The FTA may ask for additional information from the licensees in case it wants to know more about the Core Income Generating Activities (CIGAs), information on full-time employees, or evidence for substantiating the exempted status of a Licensee etc. The companies need to submit all the details requested by the Authority within the stipulated time frame to avoid attracting ESR administrative penalties in the UAE.

4. Errors in Details Submitted to National Assessing Authority

You should take care to file the UAE ESR Notification or Report properly and without any errors or mistakes. The details submitted in the ESR Notification/Report should be accurate, or you will incur a penalty of AED 50,000. In case you identify any errors, request for an ESR amendment instead of making a fresh filing. The best ESR consultants in Dubai, UAE, can help you make the amendments to your ESR Notification or Report.

Navigate the ESR Challenges with Jitendra Chartered Accountants

Companies under ESR obligation can’t afford to stay complacent even after submitting mandatory requirements such as Economic Substance Notification & Report. Issues like duplication of ESR Notification and Reports may pop up if the companies fail to stay vigilant. Many of these technical issues and errors may lead to hefty penalties if the entities fail to resolve them on time. The advice of leading ESR consultants in Dubai, such as Jitendra Chartered Accountants (JCA), will come in handy for the companies in such situations.

JCA can provide robust advice on viable solutions if any kind of mistake occurs while filing ESR Notification or Report. In this way, the businesses under obligation can avoid hefty ESR administrative penalties. In case the FTA imposes any ESR fines, JCA can help you through our robust ESR penalty appeal services in the UAE. Our ESR experts in Dubai can help you with ESR assessment, filing of ESR Notification & Report, amendment of ESR filings and recommendation to meet ESR test. Join forces with JCA’s ESR consultants to build a better future marked by growth and compliance.