Economic Substance Regulations have been issued in response to the European Union’s list of non-cooperative jurisdictions for tax purposes, in which the UAE has been enlisted. The regulation’s purpose is to promote tax transparency in the UAE. Also, the ESR in UAE would help in preventing multinational corporations from obtaining tax advantages by artificially shifting profits to UAE (as so far, no corporate tax has been there, and tax to be proposed to be introduced is also at the lower rate), without actually having substantial business activities in the UAE.