ESR is a regulatory framework introduced to ensure that companies engaging in certain business activities have substantial economic presence in the jurisdiction where they are incorporated. It aims to prevent companies from artificially shifting profits to low or no-tax jurisdictions.

Companies that fail to submit an ESR notification will incur an administrative penalty of AED 20,000, and AED 50,000 for failing to submit the ESR report.

The notification filing deadline is typically six months after the end of the financial year, and the report filing deadline is twelve months after the financial year ends. For example, if the financial year ends on March 31, the notification filing deadline would be September 30, and the report filing deadline would be March 31 of the following year.

Businesses involved in specific activities such as banking, insurance, investment management, lease finance, shipping, holding companies, intellectual property, headquarters, and distribution and service centers must comply with ESR regulations.

Required documents include the Trade License, Memorandum of Association (MoA), Certificate of Incorporation, Establishment Card, and identification documents of shareholders/directors, such as passports and Emirates IDs.

Yes, certain companies such as those wholly owned by UAE residents and not part of a multinational group, or UAE branches of foreign entities where income is subject to tax in the foreign jurisdiction, may be exempt. It is essential to seek expert advice to determine eligibility for exemption.