The Federal Tax Authority (FTA) is the UAE National Assessing Authority for Economic Substance Regulations (ESR). The FTA may send a notice or raise a query to Licensees mostly related to an ESR audit. Additionally, the license issuing authorities may also raise queries regarding the ESR Notification/Report submitted by the businesses.
Jitendra Chartered Accountants (JCA), located in Dubai, is an ESR consultant who can help you reply to the notice or queries from the FTA.
The ESR Notice from the FTA
The Licensee (a business in the UAE) will receive a notice either through the registered email. Sometimes, the notice will be received on both. The notice may indicate the submission requirements.
Contents of the ESR Audit Notice
If it is an audit, the FTA will send an “YOU ARE UNDER AUDIT” email. The email will contain:
- Notification that the Licensee is under audit
- List of requirements that need to be submitted
- Submission deadline
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ESR Notification/Report Notices
Businesses in the UAE may receive a request from the Licensing Authorities regarding the submission of an ESR Notification or ESR Report. The Authority may ask for information supporting the submissions. JCA, a leading ESR Consultant, can help you submit the reply to the UAE Authorities on your behalf.
Information Requested under ESR Audit Notice
The FTA will request the following information in its Notice:
- General documents related to the company (Trade License, Lease agreement)
- Constitutional documents (Memorandum of Association, UBO declaration)
- Details of employees (CVs, Timesheets, Employee Contracts, Passport, Visa and Emirates ID of the Employees, working papers for calculation of Full Time Employees)
- Financial information (Audited Financials/Management Accounts, Working Papers for calculation of Relevant Income, Profit/Loss attributable to the relevant activity)
- Details of assets (Details of Physical assets held in UAE, Lease Agreements, Title Deeds/purchase agreements of the assets)
- Relevant activity information (Type of Relevant Activity reported and justification as to how business activity meets the Relevant Activity criteria)
- Board meetings(Number of board meetings held within UAE and Outside UAE, Number of resident directors present, details of resident directors and non-resident directors, explanations in case no meetings were held during the reporting year)
- Outsourcing details (Information related to Outsourced activity, Entity to whom activities are outsourced and other related information)
How to Submit Responses to Notices?
The Authority may ask to reply to the notice in the following ways:
Email Response: If you receive an email notice, you can reply through a response letter along with all the relevant documents and files.
ESR Portal Response: The email may ask you to click on the link to submit the response. You can click on the link, log in and furnish the response through the resubmit link.
JCA’s Role in Providing the Responses
- Assess the notice or query and identify FTA’s requirements
- Help you prepare the relevant documentation
- Draft the responses to the query or notice
- Help you ensure you meet all the compliance requirements
- And also check if any non-compliance penalties could be levied by authority
Why Hire JCA’s ESR Services?
- More than two decades of experience
- Customer-centric approach
- Dedicated ESR consultants working for clients in Dubai and all other Emirates
- Expertise in UAE ESR laws
Frequently Asked Questions
What are the relevant activities under ESR in UAE?
Relevant Activities under ESR in UAE are Banking Business, Insurance Business, Investment Fund Management Business, Lease-Finance Business, Headquarters Business, Shipping Business, Holding Company Business, Intellectual Property business, Distribution and Service Centre Business.
What is the objective of ESR?
ESR has been introduced to prevent businesses from artificially shifting profits to jurisdictions that impose little or no income tax without having substantial activities in that jurisdiction.