FarahatandCo

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ESR for holding Company Business in UAE
https//economicsubstanceregulations.com/
esr-for-holding-company-business-in-uae/
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Introduction
Economic Substance Regulations in the UAE is a
principle and law that requires a business
license holder to adhere to Economic Substance
Return on the gross income generated from their
relevant activity. The ESR law for holding
companies, along with other licenced companies
was adopted in 2019 When it comes to filing tax
and tax returns , certain companies wish to find
loopholes within the current law system to
manipulate their financials.
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Defining a Holding Company under the economic
substance regulations to uae

• An entity in the UAE is considered a holding
  company when it meets the below criteria.
• The company holds inquiry interests in juridical
  persons.
• It only earns dividends and capital gains from
  its equity investments.
• Hence a company in the UAE that hold assets and
  has other income streams apart from dividends
  and equity is not considered a holding company.

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Economic Substance for a holding company

• A holding company must comply with the
  regulations of the licensee.
• Section 3 of the Relevant activities guide
  mentions the CIGA of any form such as assets or
  dividends earned or any other source of income
• Under section 3.7, it states Holding company is
  defined by its activity of only holding an equity
  interest in one or several companies.
• It generates its income from equity interests or
  derives dividends from the equity investments.

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Penalties for non compliance of ESR

• A fine of AED 50,000/- is levied for failing to
  conduct tests and submitting a report in the
  first year.
• A fine of AED 400,000 is levied in the second
  year if the company fails to submit the ESR
  report and conduct the tests.
• A separate fine of AED 50,000 is levied for
  providing inaccurate information to the FTA.
• A fine of AED 20,000 in case of failure to submit
  a notification
• License revoked due to repeated non-compliance.

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Four reasons why you or your company should have
a professional accountant services for ESR Filing

• To accurately track monitor the economic
  activities
• To accurately manage the reporting and
  notification to Regulatory Authorities
• To provide you with better consultancy
• To avoid conflict of Interest

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Summary

• An ESR test is a must for holding companies in
  the UAE
• ESR consultants help you identify your holding
  companies relevant activities and report the ESR
  Test notification.
• If youre looking for further information on how
  to prevent penalties for ESR notification
  failure, Get in touch with us right away.

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Contact Us

• Call 971 554828368
• Whatsapp [phone]
• Mail sales_at_farahatco.com
• Landline 97142500251
• Visit https//economicsubstanceregulations.com/e