The Economic Substance Regulations (ESR) are a set of regulations that have been implemented by various jurisdictions to address concerns about tax avoidance and harmful tax practices. The ESR require companies to demonstrate that they have a substantial economic presence in the jurisdictions where they operate, and that they engage in real economic activities rather than just being used as conduits for profit shifting.

 The implementation of ESR can vary between countries, and each jurisdiction may have its own specific legislation or guidelines regarding economic substance requirements.

The purpose of the ESR is generally to align the tax practices of multinational enterprises with the economic activities they undertake in a particular jurisdiction. This helps prevent the erosion of tax bases and ensures that profits are taxed in the jurisdictions where economic value is created.

Under the ESR, companies are typically required to demonstrate substance in terms of physical presence, personnel, and expenditure incurred within the jurisdiction. They may need to maintain proper books and records, hold board meetings, have an adequate number of qualified employees, and conduct core income-generating activities locally.

Non-compliance with the ESR requirements can result in penalties, including monetary fines or even potential loss of tax benefits or legal status for the entity in question.

It is important to note that the specifics of the ESR, including the legislation and guidelines, can vary significantly between jurisdictions. Therefore, it is essential to refer to the relevant legislation and guidance specific to the jurisdiction you are interested in or operating within to understand the detailed requirements and implications of the Economic Substance Regulations in UAE.