Page 76 - Focus Group

What’s New in ESR

ESR regulations was implemented in the UAE in 2019 through Cabinet Resolution No. 31 of 2019,
Cabinet resolution No. 58 of 2019 and Cabinet Resolution No. 7 of 2020. In 2020, Cabinet Resolution
No. 57 of 2020 amends and repeals all of them and brought new and easier compliance of ESR.
Summarizing below the key notable amendments:

Topic Old R Amended R
Any natural or juridical persons “Juridical persons” and
Licensee licensed to carry out a relevant “unincorporated partnerships”
ed all UAE
onshore and free zone companies, Thus, excludes other forms such as
branches, • Natural persons
and other business forms • Sole proprietorships
established or licensed in • Trusts
the UAE. •
Exempted Following licensees are allowed to
licensee owned Licensees :
• Non-
• Investment funds (does not include in case is a self-
managed investment fund)
• AND not
part of MNC groups AND with UAE

• UAE branches of foreign companies that are subject
to tax on all their Relevant Income in the foreign
(also refer point below)
Branches de- ES • UAE branch of a UAE business
coded requirements if carrying out a

itself and all its branches
• UAE branches of a foreign company
If all of its Relevant Income is included and subjected

as discussed above.
• Foreign branch of a UAE company
If the Relevant incomes of foreign branch is

UAE does not need to comply with

Foreign • Connected Person: •
Connected natural of juridical person same Group
Persons related to the Licensee
through direct or indirect • Foreign Connected Person: is a Connected Person that is
ownership or control, or not tax resident in the UAE
common control
• Foreign Connected •
Person: not resident or ownership or control such that they are required to
deemed as resident in the
UAE
• applicable thereto
• •
& Service Connected Person component parts or materials for

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