Economic substance regulations and regulatory compliance

Einführung

The UAE Ministry of Finance implemented cBrain’s Commercial-off-the-shelf (COTS) platform for government, to streamline compliance workflows and regulatory oversight as part of their introduction of Economic Substance Regulations (ESR) to align with global tax compliance standards.

Fallmetriken

Key statistics

30,000

cases processed annually by the UAE Ministry of Finance

36+

regulatory authorities enabled to provide key tax compliance service fully digitally

self-service integrations, allowing seamless interaction

Die Herausforderung

Ensuring transparent and efficient compliance with international tax standards

As part of its commitment to the OECD Inclusive Framework, the United Arab Emirates (UAE) Ministry of Finance introduced Economic Substance Regulations (ESR) to align with global tax compliance standards. These regulations require companies operating in the UAE’s onshore, offshore, and free zone jurisdictions to maintain an adequate economic presence relative to their business activities. To comply with these new obligations, companies must submit annual notifications and reports to regulatory authorities and the Federal Tax Authority.

The UAE needed a centralized digital system to manage ESR compliance and ensure seamless information exchange with the OECD Common Transmission System (CTS). The process involved multiple stakeholders, including businesses, regulatory authorities, and the Federal Tax Authority, making manual reporting inefficient and prone to errors. Additionally, the government required an automated risk assessment framework to monitor non-compliant companies, issue penalties, and provide decision-making support for tax authorities.

Die Lösung

Streamlining tax compliance and regulatory oversight with F2

To address these challenges, the UAE Ministry of Finance adopted a digital solution based on F2, a fully integrated platform for government, designed to process Economic Substance Reports and streamline the compliance workflows. The solution provides self-service portals for businesses to submit ESR notifications and reports, while the backend allows tax authorities to review submissions, administrate penalties and carry out audits as well as leverage embedded risk assessment tools to identify compliance risks.

By leveraging COTS software for government, F2 enabled rapid deployment, secure data processing, and seamless integration with OECD countries through the Common Transmission System (CTS). The solution digitally streamlines penalty administration, audit processes, and international information exchange, ensuring efficiency, accuracy, and regulatory compliance.

Das Ergebnis

Strengthened compliance, risk management, and digital governance

With F2, the UAE Ministry of Finance has implemented ESR compliance as a fully digital and streamlined process. The fully digital ESR solution enables the UAE government, including the Ministry of Finance, Federal Tax Authority, and 36 regulatory authorities, to provide tax compliance services, ensuring 30,000 cases are processed annually, providing greater efficiency and transparency in tax compliance.

A secure, centralized system automates administrative tasks such as email reminders and deadline calculations, improving productivity and ensuring a single auditable record of all activities. Government users benefit from a centralized compliance dashboard, enabling real-time monitoring and embedded risk scoring for businesses.

By adopting a structured, digital compliance framework, the UAE has enhanced its global tax governance standards while ensuring efficiency and accuracy in economic substance reporting.

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