Important Update on UAE Economic Substance Regulations (ESR)!

The UAE Government has recently issued Cabinet Decision No. (98) of 2024, bringing key changes to the Economic Substance Regulations (ESR) that businesses need to be aware of.

Here’s a quick summary of what’s changed:

1️⃣ New Scope of Application
The ESR now only applies to financial years starting from 1st January 2019 through 31st December 2022.

2️⃣ Cancellation of Penalties
All administrative penalties imposed on licenses for financial years ending after 31st December 2022 are cancelled!
If any penalties have been paid for this period, they’ll be refunded, and ongoing proceedings will be withdrawn.

What does this mean for your business?

While the ESR only applies to the 2019-2022 period, the Federal Tax Authority (FTA) can still conduct audits for up to six years after the ESR period. We highly recommend keeping all necessary documentation for those years to ensure compliance.

Need help navigating these changes? Feel free to reach out to us at tax@ascentiame.com – we’re here to guide you!