Since its inception in 2019, Economic Substance Regulation has formed an integral part of reporting to the Federal Tax Authority. The National Assessment Authority ensures that all the information provided by the licensee for notification or reporting complies with the required standards. If not, then there is a penalty levied on the licensee. There is, however, a window of days where the licensee can appeal to the FTA regarding the administrative penalties.

1. Understanding the types of Penalties and
How to appeal against an ESR Penalty

2. Introduction
Economic Substance Regulation has formed an integral part of reporting to the Federal Tax
Authority.
The National Assessment Authority ensures that all the information provided by the licensee for
notification or reporting complies with the required standards. If not, then there is a penalty
levied on the licensee.
There is, however, a window of days where the licensee can appeal to the FTA regarding the
administrative penalties.

3. What are the types of Penalties under ESR
● Penalty under Article 13
● Penalty under Article 14
● Penalty under Article 15

4. Penalty under Article 13
The failure of the licensee or the exempted licensee to submit a notification within
six months from the end of the financial period.
The period for submitting the notification can be extended only with the authority’s
approval for exceptional cases.
The penalty amount is AED 20,000.
The penalty could be levied until six years from the violation date if the penalty was
not imposed earlier by the National Assessment Authority.

5. Penalty under Article 14
The two violations under article 14 are
1. The penalty is levied if the ESR report is not submitted within 12 months
from the end of the financial year
2. Submitting an incomplete report that doesn’t meet the ESR reporting
standards.
If the license or the exempted license company repeats one of the two mentioned
violations in the following year, there is a penalty.

6. Penalty under Article 15
Article 15 is divided into two parts. One is the submission of incorrect reporting, and
the second is the person aware of the inaccurate and erroneous data at the time of
report submission.
The second part of the article states that the responsible person for the ESR
reporting must notify the National Assessing Authority about any discrepancies and
or special notes or any possibility that data can be inaccurate due to some reasons.

7. What is the objective of an appeal under ESR?
Under the Cabinet of Ministers Resolution number 57 of the year 2020, under article
17, there is a provision for “appeal” as a service concerning the Economic
Substance Regulation. Therefore, if a licensee is specific, they
1) Did not commit the violation,
2) The penalty imposed is not in proportion with the violation and
3) The administrative penalty imposed is greater than the limited prescribed penalty.

8. Steps to appeal for an ESR Penalty in UAE
1. An Appeal can be registered by going to the Ministry of Finance Portal and
logging in with the registered login details.
2. The entire process of ESR submission is mentioned on the dashboard in a
vertical format with a deadline mentioned adjacent to it. You need to click
on the “Appeal Option”.

9. Economic Substance Regulations in UAE
Call : +9715548368
Whatsapp:+9715548368
Landline:+97142500251
Mail:sales@farahatco.com
Website: https://economicsubstanceregulations.com/