Why ESR and CbCR Provisions have been introduced?
- Harpreet Singh
- Nov 7, 2019
- 1 min read
The regulations would assist in aligning UAE’s legislative framework to the standards set out in the OECD Base Erosion and Profit Shifting (BEPS) action plan. The regulations are similar to economic substance requirements recently implemented in other tax-free(vat in uae) jurisdictions such as the Cayman Islands.
Provisions of ESR
The provisions of this Resolution shall apply to a Licensee that carries out any Relevant Activity.
Entities that are directly or indirectly owned by the UAE government (both federal and local) are specifically excluded from the Regulations.
Different Reporting Requirements for Companies in UAE under ESR & CbCR
For the purpose of ESR, the licensee shall report the type of Relevant Activity conducted by it, the amount and type of relevant income in respect of the Relevant Activity, the amount and type of operating expenses and assets in respect of the Relevant Activity, etc.
For purpose of CbCR, a Report with respect to a Multi-National Entity (MNE) Group shall include information relating to the amount of revenue, profit (loss) before income tax, income tax paid, income tax(vat in uae) accrued, stated capital, accumulated earnings etc. with regard to each jurisdiction in which the MNE Group operates, identification of each Constituent Entity of the MNE Group setting out the jurisdiction of tax residence of such Constituent Entity.
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