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FAQ

Frequently Asked Questions

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  • What is ESR in compliance?

    Companies that conduct specified activities as outlined by the Economic Substance Regulations must demonstrate compliance by passing an Economic Substance Test, as these activities are considered to generate a significant income for the business.

  • Is ESR filling mandatory?

    If a business falls under an activity defined by the Economic Substance Regulations (ESR), it is mandatory for them to file for ESR, regardless of whether the income or revenue generated is from the relevant…

  • Who is liable to file for ESR in the UAE?

    All companies operating within the UAE, whether onshore or in free zones, and any resident business entity, are mandated to comply with the Economic Substance Regulations (ESR).

  • What are economic substance regulations?

    The Economic Substance Regulations (ESR) are in place to ensure that companies operating in the UAE have a significant presence in the country and are conducting business activities that contribute to the economy. This helps…

  • Will I have to pay UAE CT alongside VAT in the UAE?

    If you are a registered business for VAT, you will have to pay VAT and CT separately. If your business is not VAT registered you may still have to pay CT.

  • Will UAE CT replace VAT in the UAE?

    No, CT and VAT are two different types of taxes. Both will continue to apply in the UAE.

  • Who will be subject to UAE CT?

    UAE CT applies to juridical persons incorporated in the UAE and juridical persons effectively managed and controlled in the UAE, as well as to foreign juridical persons that have a permanent establishment (see section Foreign…

  • When will the UAE CT regime become effective?

    The UAE CT regime will become effective for financial years starting on or after 1 June 2023. Examples: 1. A business that has a financial year starting on 1 July 2023 and ending on 30…

  • Is the UAE, the first country introducing CT?

    Most countries in the world have a comprehensive CT regime, including most of the countries in the Middle East.

  • Why UAE introduce CT?

    A competitive CT regime based on international best practices is expected to cement the UAE’s position as a leading global hub for business and investment and accelerate the UAE’s development and transformation to achieve its…

  • What is CT?

    CT is a form of direct tax levied on the net income or profit of corporations and other businesses. CT is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other…

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