Noncompliance with the Economic Substance Regulations and standards accrue hefty penalties upon corporations. Thus, companies that fall under the ESR’s purview are commended to avail the services of top ESR consultants in the UAE to stay compliant and avert penalties.
Noncompliance with Economic Substance Regulation
It is imperative for companies that conduct relevant activities and generate a relevant income to avert the following:
Not Submitting an ESR Notification or Late Submission
As per the Ministerial Decision No. 100 of 2020, the penalty for noncompliance starts from 20,000 UAE dirhams. Both qualifying and exempted companies should submit the ESR report timely to and noncompliance accrues penalties upon companies.
Not Submitting an ESR Report or Late Submission
Companies that meet the Economic Substance Test should submit an ESR report. In this instance, the penalty for noncompliance starts from 50,000 UAE dirhams. However, exempted businesses do not need to file a report. Thus it is essential to avail the services of reputable tax consultants in the UAE to timely file ESR reports and to stay compliant.
Submitting the Notification, Report, or any other Document with Incorrect Information
Upon submitting the ESR notification and report, it is imperative for businesses to file and maintain correct information. Corporations need to be very precise and careful while providing information to the regulatory authority such as financial records or any other type of document that might be required by the authority.
Read more: The UAE Economic Substance Regulations (ESR) Reporting Guidelines
Now, let us have a look at some unclear instances that lead different businesses to penalties when they were not expecting any;
Submitting a Notification without conducting a Relevant Activity
It is essential for businesses to thoroughly establish whether they conducted a relevant activity which generates a relevant income within a reportable period prior to filing the report and returns. Hence, businesses can ensure the submission of accurate information.
Filing for a different relevant activity
Oftentimes, an error can cause the filing of a wrong relevant activity. For instance, banking businesses can mistakenly file under a leasing and finance activity. Subsequently, an amendment can be requested and made to correct the mistake to avoid incurring fines.
Choose the expert services of UAE ESR Experts
It is advisable for corporations that meet the Economic Substance Regulation test to avail the services of top ESR consultants in the UAE upon filing ESR notification and reporting. Top ESR Consultants in the UAE also assist companies to stay compliant to the Economic Substance Regulation and to avert penalties. So, contact us today and we shall be happy to assist you!