Page 47 - Focus Group

A Quick Guide on ESR

As the deadline to file Economic Substance Regulations (ESR) notification has already passed for the finan-
cial year January – December 2019, applicability and compliance with ESR continues to be a matter of prime
importance, as this will be annual compliance affair. The applicability of ESR need to be checked every year.
The following table can be used as a quick guide to check the ‘applicability’. However, one must read the
regulations carefully, before coming to any conclusion:

Applicability Acid Test
1 Buying from a related party
outside UAE
We are buying from a related party outside UAE Yes
We are buying from a related party in UAE No
We are not buying from a related party but selling to a NO
related party within UAE /outside UAE
Service Centre Business Providing service to a related
party outside UAE
We are
i. Related party outside UAE Yes
ii. Related party in UAE No
iii. Unrelated party outside UAE No
iv. Our related party outside UAE is providing No
C
service to us
M
2 Headquarter Business Providing Strategic decisions to
Y
foreign group companies

companies in …
i. UAE No
ii. Outside UAE Yes
iii. We are part of a group where strategic decisions No
K
are taken outside UAE
3 Holding Company Business Holding shares and earning only
dividend and capital gains- No

Yes
interest in other companies
No Please note you may not fall

but may have to evaluate for

We invest in Debentures and interest-bearing loans No Please note you may not fall

but may have to evaluate for

Finance, depending on
mechanism of issue of
debentures
4 Investment Fund Management Services of managing a fund
with /divest
We own our fund and manage ourselves No
No
We provide advisory service to manage fund No
We provide service and decide on investment/divest Yes

The Institute of Chartered Accountants of India (Dubai) Chapter NPIO TAX JOURNAL 2020 47