Economic Substance Regulations in UAE

With economic substance regulation services, we assess your ESR position and provide assistance with tax filings. This streamlines your business and helps with taxation.

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What is Economic Substance Regulation In UAE?

The economic substance framework applies to all companies licensed in the UAE to control tax evasion. It was founded to regulate tax liabilities in the UAE. This helps to streamline the advantages taken due from the low-tax systems.

The regulation will apply to businesses registered onshore and offshore.This facilitates companies in the country to pay the correct amount in taxes.

What is Ultimate Beneficial Ownership (UBO)?

Ultimate Beneficial Ownership (UBO) is the term used to describe the natural person who ultimately owns or controls a business whose behalf a transaction is carried out.

What are the Aspects of ESR UAE?

Suppose a business entity earns income from a “Relevant Activity” which have been specified. In that case, they need to take part in an Economic Substance Test which will help in clarifying the following points:

  • The “Relevant Activity” is being conducted and managed in the Country.
  • All the relevant Core Income Generating Activities (CIGA) are conducted in the Country.
  • The business entity files an Economic Substance Return within 12 months of the end of the Financial Year in the country.

Avail best quality Auditing and Accounting services from JAXA

The expert will help to tackle business issues by following proper Accounting and Auditing guidelines will also assist you to scale up your business. JAXA also provides various other services such as Tax Services, Payroll Services, Cash flow forecasting and many more.

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Advantages of Economic Substance Regulations in UAE

Enhances the Goodwill of the Company

Complying to the Economic Substance Regulation will allow the investors to sense of relief that the company can be trusted. This will attract more potential investors for the company.

Prevent Tax-Related Fraud in the Country

ESR will provide a correct picture of the taxes required to pay the company and will also create transparency for the government.

Enhance Fair Competition

Every company will have to comply with the Economic Substance Regulations, which will lead to a reduction in bogus and fraudulent companies.

Support the Economy of the Country

The implementation of this regulation will increase the revenue from the taxes paid by the companies, which will, in turn, affect the economy in a positive way.

What we provide

  • We ensure that all the records are compliant with the International Financial Reporting Standards (IFRS)
  • We are registered and approved auditors in major free zones in Dubai, making it easy to conduct audits in the free zone.
  • JAXA has over 15 years of experience and a knowledgeable team of 75+ employees.
  • Over a decade of quality service has made us one of Dubai's most preferred auditing and accounting firms.



Client Approaches Jaxa

Company data is provided


Jaxa Understands the Business

The work done by the business is analyzed


File the Notification

Jaxa will help in filing the positive or negative notification concerned with the relevant activities 


ESR Test

The companies which conduct the relevant activities need to conduct as ESR test

Frequently Asked Questions

What is the purpose of ESR?

The ESR's primary purpose is to ensure that the UAE business entities do not artificially inflate their profits.


Who is excluded from the Economic Substance Regulation?

According to the revised ESR resolution, the following entities which undertake Relevant Activity in the UAE -
1. An Investment Fund (It will include its underlying SPVs and/or Investment Holding entities)
2. An Entity that is tax resident outside the UAE
3. Branch of a foreign entity whose relevant income is subject to tax outside the UAE
4. An Entity that is wholly owned by UAE residents and meets the following conditions:
● The Entity is not part of an MNE Group
● All the activities of the Entity are exclusively carried out in the UAE


What if the business entity conducts the “Relevant Activity,” but no income is earned?

In such a case, the business entity must submit the relevant notification to the Regulatory Authority. Still, there is no requirement to file an economic Substance Return for the financial period.


Do the business entities going through liquidation need to file ESR notification?

Yes, they need to


What is Ultimate Beneficiary Ownership?

UBO is the ultimate owner of the company.