Are branches subject to the Regulations?

The answer to whether branches are subject to the ESR depends on certain factors. It’s crucial to note that ESR applies to entities that engage in “Relevant Activities” within the UAE. These activities include:

1. Banking Business
2. Insurance Business
3. Investment Fund Management Business
4. Lease-Finance Business
5. Headquarters Business
6. Shipping Business
7. Holding Company Business
8. Intellectual Property Business
9. Distribution and Service Centre Business

If a branch conducts any of the relevant activities mentioned above, it falls under the purview of the ESR. However, if the branch solely performs administrative or support functions and does not engage in any relevant activity, it may be exempted from the ESR requirements.

Where do I report the details of my branch?

If your branch is subject to the ESR, it is crucial to understand the reporting obligations associated with it. The Regulatory Authority in the UAE, the Ministry of Finance, has designated the Federal Tax Authority (FTA) as the entity responsible for collecting and administering ESR-related information.

When reporting the details of your branch, you will need to provide the following information:

1. Entity Information: Include details such as the legal name, trade name, and trade license of the branch.
2. Activities: Clearly specify the nature of activities carried out by the branch, ensuring they align with the relevant activities listed under the ESR.
3. Financial Information: Provide financial statements and relevant financial data for the branch.
4. Employees: Disclose the number of employees engaged in the branch’s activities.
5. Physical Assets: Report the value and location of physical assets used by the branch in its operations.
6. Core Income-Generating Activities (CIGAs): Identify and describe the CIGAs performed by the branch in the UAE.
7. Confirmation: Declare that the branch has met the Economic Substance Test and attach any supporting documentation if required.

Conclusion:

Compliance with the Economic Substance Regulations is crucial for businesses operating branches in the UAE. Determining whether your branch falls under the scope of ESR is essential, as it will dictate your reporting obligations. If your branch engages in relevant activities, it must report the necessary details to the Federal Tax Authority (FTA) in accordance with the regulations.

We hope this article has provided you with valuable insights into the treatment of branches under the ESR and the reporting process. Stay tuned for our next blog, where we will explore another relevant topic related to Economic Substance Regulations in the UAE.

Disclaimer: The information provided in this article is for general informational purposes only and should not be considered legal or professional advice.