Deadline for ESR (i) Notification and (ii) Reporting
(‘ESR’) notification within six months from its Financial Year-end, and the businesses which are earning “Relevant Income” are required to submit ESR report within 12 months from the end of its Financial Year.
So, based on the above requirement of the ESR Law, December 31, 2021, is the notification and reporting deadline line for the related entities whose financial year ends on June 30, 2021, and December 31, 2020, respectively, and the timeline has been summarized as under:
| Financial year End | Filing Deadlines | |
| Notification deadline | Reporting deadline | |
| 31-Dec-2020 | 30-Jun-2021 | 31-Dec-2021 |
| 30-June-2021 | 31-Dec-2021 | 30-June-2022 |
ESR Compliance Tests:
ESR reporting requires the following tests have been fulfilled, and related documents be available.
- Direction and Management Test
- Core Income Generating Activities (CIGA) Test
- Adequacy Test
We recommend that all UAE companies should assess their activities to determine whether they fall within the scope of ESR. In case they are falling under ESR, then they need to complete and file the necessary Notification and related Report within the due date to avoid hefty penalties, which are given as under:
ESR Non-Compliance Financial Penalties:
- Failure to Submit ESR notification: AED 20,000
- Failure to Submit a Report: AED 50,000
- Provide Inaccurate or incomplete information: AED 50,000
- Failure to demonstrate sufficient substance in the UAE: First failure AED 50,000 and second consecutive instance of failure is AED 40,000.
How Can AGX Team Help?
AGX your reliable Tax, Audit and Advisory Partner, is already helping a lot of multinationals and local companies to comply with ESR by providing the following services:
- Impact assessment of ESR
- Restructuring so that your business can meet ESR tests
- Timely submission of ESR Notification
- Timely submission of ESR Report
AGX team isexpertise to take care any kind of ESR requirement, please contact us at support@agxauditors.com, and +971 4 2598985. We would be delighted to assist you