ESR standards require UAE entities carrying out Relevant Activities and making money from them to pass Economic Substance Test. Moreover, they must conduct qualitative and quantitative assessments to show that their activities fall within the ESR guidelines. UAE businesses must meet the Economic Substance Test to ensure regulatory compliance while signaling their financial strength.
Economic Substance Test under the ESR guidelines need UAE businesses to demonstrate the following.
Entity is being managed and its Relevant Activity is being run in the UAE
It is conducting the Core Income Generating Activities (CIGAs) within the UAE
Entity has enough staff, appropriate premises, and adequate finances in the UAE