ESR for Intellectual Property Business in UAE

What is intellectual property?

Intellectual properties are intangible assets. They are legally bound and protected from illegal use by any other party. An intangible asset in Intellectual Property rights is given the same importance as a tangible asset like a car model. It is equally apt to protect people’s intellect legally to encourage more and more people to come up with creative and helpful ideas for the benefit of society and its people.

In the UAE, intellectual property is generally categorized in three categories, namely:

  1. Trade Marks
  2. Copy Rights
  3. Patents

Trade Marks 

As per Federal Law No. 37 of 1992, a trademark is an intangible asset distinguished from names, words, logos, signatures, seals, hallmarks, etc. The voice accompanying the trademark is also a part of the legal framework of trademarks. Trademarks help distinguish a particular owner’s products from other similar products in the market. All UAE Citizens, Foreigners natural or artificial persons based in UAE or any outside country can apply for the trademarks.

How do I register for a trademark in the UAE?

The E-service portal receives applications online for trademark requests. For registration of the trademark, an owner has to apply to the Ministry of Economy. The below documents are required while using.

  • Trademark Logo
  • Commercial License
  • Power of Attorney
  • Priority Documents
  • Passport Copy


According to Federal Law of the UAE, a copyright is an intellectual work of a person, or artificial people that is original in nature in areas of literature, or science, such as books, creative content, computer codes/ programs, art forms, and physical forms such as statues, music etc., An E-application has to be submitted online on Ministry of Economy portal, to apply for the copyrights intellectual property legal rights in the UAE. 

The intellectual property rights for copyright work is 50 years in the UAE. However, the economic rights for expire after 25 years, calculated from the first calendar day of the calendar year.


The Federal Law No 31 of 2016 and Law No 17 of 2002, for the protection and regulation of industrial property of patents. In the UAE, patent protection is granted to original inventions, Innovative ideas, drawings and designs. These inventions and ideas must have a scientific base and must be industrially applicable. The registration of patents is done on the International Centre for Patent Registration (ICPR) under the Ministry of Economy.

Economic Substance Regulations on Intellectual Properties

 For a company to show that they fall under the scope of ESR filing, it needs to demonstrate relevant activity. A prime example of this is a franchise. Various investors benefit from using Intellectually properties by borrowing the same from the owner to generate income. Once the company displays adequate staff and IPHC company scope, they are liable for ESR filing. Companies have an increased Intellectual Property ESR Test when they are in partnership with other foreign companies for IP rights.

You may also like  ESR for distribution & service centre business in UAE

When is a business High-Risk IP Licensee under ESR?

High-Risk IP licensee obtained from parent company based abroad earn royalty by IP usage of the foreign company. On the other hand, IP companies in the UAE lack the essential ESR requirements and the parent company use these franchises or subsidiary companies as a route for tax evasion. Therefore to tackle such cases, there is an increased Economic Substance Regulation test. The company has to prove

  1. It has adequate staff in the UAE office
  2. The company demonstrates the relevant activities wherein the reasons for using the IP are clearly stated

On the other hand, if companies use such intellectual properties but do not benefit from them, they are exempt from the ESR. Parent companies get a reduction on the tax liability when they file their taxes in their country by showing on books the royalty paid to IPHC’s. The IPHC, in this case, can be used as a scapegoat to report profits from lower tac countries. A kind of Tax evasion. Hence an increased Economic Substance Regulation test is required for all IPHC.

Companies are exempt from ESR filing if they demonstrate that there is no core income-generating activity from the IP of the parent company. However, companies fall in the ESR scope if their timely, important decisions are taken in the UAE. The business plans show that there are adequate staff, and the companies passively used the IP royalties of the parent company.

Why consult an ESR Consultant today?

 It is essential for companies that use royalties in the UAE to undergo increased ESR testing. Only qualified accountants and chartered accountants can help you define the structure of your business. The license can contact ESR consultants in UAE for companies using franchisees to confirm if they fall in the high-risk ESR category. Economic Substance Regulations are the best ESR consultants in the UAE.