Economic Substance Regulations Reminder – December 2021

Businesses with a financial year of 31 December 2020 are reminded that the due date for the ESR reporting is 31 December 2021 if they performed a Relevant Activity during the financial year. The ESR report is required if the business is earning income from the Relevant activity reported and is not eligible to claim exemption under ESR.

Businesses with a financial year ending 30 June 2021 are required to file ESR notification by 31 December 2021 if a Relevant Activity is undertaken. This notification would be required even if the same activity was performed and notified for financial year ended 30 June 2021.

ESR notification and reporting are two separate filings and is an annual obligation for licensees within the scope of ESR. Failure to submit by the required deadlines would attract penalties ranging from AED 20,000- AED 400,000. Considering this is the second year of filing, the higher penalty of AED 400,000 shall apply for delay in filing ESR report if the business was not compliant in the previous year.

Below is the summary of the upcoming deadlines for reference:

If you have missed filing the ESR notification on time, we recommend that the notification is filed at the earliest to avoid any delay in ESR reporting.

If you would like to learn more about this topic or need assistance with any aspect of the ESR, please get in touch with BDO’s UAE tax team or your normal BDO contact.