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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.
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.
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.
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.
Effective ESR record-keeping involves organizing and maintaining documentation that supports the company’s economic activities in the UAE. Key components include
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.
Don’t wait—schedule your free consultation today and take the first step towards transforming your vision into reality!