Economic Substance Regulation

ESR Record Keeping Services

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    ESR Record Keeping Services

    The Economic Substance Regulation (ESR) in the UAE stipulates that relevant activities businesses must keep accurate records in order to be able to demonstrate compliance. The standardized procedure of Record Keeping ensures adequate accounting of the temporary presence of the companies, like the employment records, operational expenses, and the specifics of the core income-generating activities (CIGAs), among others. At Vigor Accounting & Taxation, with the help of our team, businesses are going to be able to introduce effective record-keeping systems to meet the relevant legal requirements and also avoid any fines.

    Importance of ESR Record Keeping

    • Facilitating Audits

      In the event of an audit by the UAE authorities, it is easy for businesses to provide evidence of their economic substance if the records are really well maintained. This includes records of Core Income-Generating Activities (CIGAs), staffing, and financial transactions, which are essential to proving compliance.

    • Avoiding Penalties

      Failure to maintain accurate ESR records can lead to significant penalties, ranging from AED 20,000 to AED 400,000, depending on the severity of the non-compliance. Proper record-keeping minimizes the risk of such penalties by ensuring that businesses are fully prepared for audits or inspections.

    • Ensuring Compliance

      Maintaining accurate ESR records is vital for demonstrating compliance with the regulations of the Economic Substance law of the United Arab Emirates. It is mandatory for companies to retain the same records for at least six years to justify any ESR requests or inspections. These records can serve as proof that a company satisfied all the economic substance requirements, such as possessing the necessary employee strength, office space and management involvement in the UAE.

    Key Components of ESR Record Keeping

    Effective ESR record-keeping involves organizing and maintaining documentation that supports the company’s economic activities in the UAE. Key components include

    01
    Employee Records
    Businesses must keep detailed records of all employees involved in CIGAs, including their roles, responsibilities, and compensation. These records must demonstrate that the business has adequate staffing levels in the UAE to support its operations.
    02
    Financial and Transactional Records
    Companies must maintain records of all financial transactions related to their CIGAs, including revenue, expenses, and any relevant contracts or agreements. These records are crucial for demonstrating that the company’s operations generate income within the UAE.
    03
    Physical Asset Records
    Proof of the company’s physical presence in the UAE, such as office space and equipment, must be maintained. This includes leasing agreements, purchase receipts, and any other documentation related to the business’s assets.
    04
    Board Meeting Minutes and Management Decisions
    To prove that management and decision-making activities take place in the UAE, businesses must keep records of board meetings, including minutes and attendance records. This is especially important for companies with international operations, as it shows that key decisions are made locally.

    How Vigor Accounting & Taxation Can Help

    At Vigor Accounting & Taxation, we provide tailored solutions to help businesses establish and maintain effective ESR record-keeping systems. Our services ensure that your business remains compliant with UAE regulations and is prepared for any audits or inspections.

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    Custom Record Keeping Solutions

    We interface with enterprises in the formulation of personalized record maintenance systems that fulfill ESR standards. This also entails devising templates and checklists that authenticate the gathering and proper archiving of every pertinent credential.
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    Ongoing Compliance Support

    Our team always helps your business to be compliant with the very complex ESR regulations. We frequently assess your records to determine any areas that require improvement and make suggestions for that.
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    Audit Preparation

    In the event of an audit or inspection, we assist businesses in organizing and presenting their records to demonstrate full compliance with ESR requirements.

    Transform Your Vision into Reality—Book Your Free Consultation!

    Don’t wait—schedule your free consultation today and take the first step towards transforming your vision into reality!

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