ESR Portal is Live: What UAE Businesses Should Have to do Now?

Businesses in the UAE are now in the last sprint of ESR submissions as the Ministry of Finance (MOF) Portal is lived since 1st December 2020. And the deadline for filing notification and reports is nearing i.e 31st January 2021. This is a hectic time for all the companies in the UAE as any non-compliance or errors would lead to administrative penalties and other grave consequences. Also, acquainting with the MOF portal in such a short time also requires a great deal of effort to educate the business community and clarify the doubts. The most efficient way to ensure compliance right now is having fruitful talks with audit firms in Dubai that offer consultation on Economic Substance Regulation (ESR). As last-minute assistance, this blog here guides you through what should be done with regards to the ESR submissions.

ESR Deadline is Fast Approaching

As per Cabinet Resolution No 57/ 2020, the mainland, Freezone and offshore companies in the UAE must submit the notification and reports on or before 31st January 2021. The companies that previously submitted the notification must now refile their annual notification. The licensees that were exempt previously but have been included within the scope of the amended regulation must also submit the ESR notification to the Regulatory Authority. All the companies that are required to undertake the UAE Economic Substance Test must submit the ESR Report through the new MOF portal. Audit firms in Dubai provide assistance in submitting the notification and reports through the ESR portal.

A Brief Guide to ESR Notification & Report

Filing the notification is the first step in the process for the Licensees to ensure compliance with the ESR obligations. The notification serves as a self-declaration that states whether the companies are conducting Relevant Activities and generating income from the Activity. The ESR report is applicable for the Licensees that con=duct the Relevant Activity and earn income from the Activity. Filing of both ESR notification and Reporting needs to be done meticulously, which warrants the guidance and assistance of ESR consultants. Hire the services of the registered audit firms in Dubai for availing the best ESR consultation.

Requirements for Refiling of ESR Notification & Report

As per Cabinet Resolution No 57/ 2020, the Licensees need to state the jurisdiction of the parent company, Ultimate Parent Company, and Ultimate Beneficial Owner who claim to be tax residents. The licensees that are required to file the ESR Report must submit a copy of financial statements.

The licensees must file the ESR notification within six months from the financial year-end. Those who have filed the ESR notification prior to the amendments in the UAE ESR Law should re-submit the modification to the relevant regulatory authority.  This means, all the notifications for the financial year ended 31st December 2019, must be re-submitted.

Penalties for ESR Non-compliance

The new regulation has revised the penalties levied upon the entities violating the ESR norms. The major ESR penalties are the following:

• AED 50,000 for failure to submit reports or failure to meet the requirements ESR test in the first year.
• AED 400,000 if the Licensees fail to file reports or fail to meet the requirements of ESR tests in the second year.
• AED 50,000 for furnishing inaccurate information to the RA or FTA
• AED 20,000 for failure to submit annual ESR notification
• License cancellation for repeated non-compliance

A Quick Guide for Using the ESR Portal

The MOF portal has been designed to serve as an efficient platform to submit the ESR notification, report and the required documents. ESR consultants in Dubai will help the companies easily navigate the complexities of filing ESR notification and Reports in the Portal. The following are some of the prominent features of the MOF portal:

Requirements for Access

Companies are required to have an existing MOF corporate account to access the ESR Portal. The credentials that are recorded in the corporate account can be used to access the Portal for ESR filing purposes. Licensees that are not registered as corporate users need to create a fresh account to file the ESR notification and Reports.

Licensee Dashboard

The Licensee Dashboard is the main page that the users can see every time they log onto the Portal. This Dashboard provides an overview of the forms that have been submitted and their status. The Dashboard also allows the Licensee to create a new submission or request amendment of a Notification or Economic Substance Report previously submitted.  The Dashboard has provisions for Notification, Report, Penalties, and options to file Appeals against any penalties.

How Can Audit Firms in Dubai Help?

In light of the new developments in the ESR regime, ESR consultants in Dubai advise the Licensees to be ready for ESR Notification and (as the case may be) ESR Report within the stipulated deadline. Since any non-compliance is bound to attract hefty penalties, the Licensees are recommended to hire the services of the best audit firms in Dubai such as Jitendra Chartered Accountants (JCA) who provide efficient ESR consultation. JCA has highly qualified auditors and ESR consultants who will ensure that the Licensees are abiding by the law in the best possible way.