UAE Banks and Shippers Exempted from ESR Audits: A Major Boost for Multinationals

Dubai, UAE – In a significant move that will provide relief to UAE banks and shipping companies, the Ministry of Finance has announced that these entities will no longer be required to file Economic Substance Regulation (ESR) audits. The new rules, which came into effect on September 1, 2024, are part of the UAE’s efforts to streamline its regulatory framework and attract foreign investment.

The ESR, introduced in 2019, required certain entities operating in the UAE to demonstrate that they have a genuine economic presence and are not merely shell companies. While the ESR has been effective in ensuring transparency and preventing tax evasion, it has also imposed additional compliance burdens on businesses.

The exemption from ESR audits for banks and shipping companies is expected to provide significant cost savings and reduce administrative burdens for these entities. It is also seen as a positive development for multinational companies operating in the UAE, as it simplifies their compliance obligations.

The UAE Ministry of Finance has emphasized that the decision to exempt banks and shipping companies from ESR audits does not mean that these entities are no longer subject to other regulatory requirements. They will still need to comply with other relevant laws and regulations, such as anti-money laundering and counter-terrorism financing rules.

The exemption from ESR audits is a testament to the UAE’s commitment to creating a business-friendly environment and attracting foreign investment. By streamlining its regulatory framework, the UAE is positioning itself as a preferred destination for multinational companies.


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