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What are the guidelines to comply with the banking business?

05-01-2021 11:18 AM CET | Business, Economy, Finances, Banking & Insurance

Press release from: NSKT Global

What are the guidelines to comply with the banking business?

What are the guidelines to comply with the banking business?

Explaining banking business activity in ESR.

Economic Substance Regulation or more popularly known as ESR was introduced everywhere to achieve compliance with the major regulatory bodies from the US and Europe, in efforts to offer minimal tax liabilities to the businesses and organizations. This will ensure that such organizations have access to the economic substance in the jurisdiction. The main criteria for ESR applicability on such organizations are that they should be carrying out specific types of business activities.

What are the rules for identifying whether a business carries out relevant activity?
If any organization is caught in the dilemma of whether their activities fall in the list of the relevant activities, then they must refer to schedule 1 of the Ministerial Decision 100, for good.

Say, an organization that has been doing the following activities is liable to fall under the relevant activities criteria of the banking business:

Read the complete blog here
https://nsktglobal.com/what-are-the-guidelines-to-comply-with-the-banking-business-

Accepts deposits of withdrawable money, or repayable on the demand after notice or tenure which is fixed.
Use partial or entire deposits for making investments or giving advances/ loans/ overdrafts/ guarantees or similar facilities

What is an appropriate substance?

Businesses vary in size and their incomes apart from nature. So, following that, The Economic Substance Regulations clearly state that there is no “minimum” standard for the terms “adequate” or “appropriate”.

FTA goes with a realistic approach while assessing the Economic Substance Test, considering whether the relevant activities have fluctuated in the respective financial year.

Here are some important takeaways:

UAE Tax residency Certificate isn’t proof of meeting the Economic Substance Test for the carried relevant activity
Employees who carry out the CIG (Core Income Activity) have to be a resident in the UAE. In other cases, they have to carry out activity while being physically present in the UAE, under the Licensee directions and the licensee bearing the relevant costs of the individual.
An adequate number of board meetings need to be held in UAE by the Licensee, with signed and maintained meeting minutes and board of directors with necessary skills and expertise to carry out their duties; present in UAE. In the case of a holding company, the business is not required to be directed and managed in the UAE, except it is required by the relevant licensing authority.

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We have published a explanatory Guide on What ESR is? and how to file ESR in the UAE?. All Licensees and the exempted licensees have to file a Notification within the six months of the respective financial period, if they have carried out any relevant activity which has garnered them income, with notifications filed on the Ministry of Finance filing portal. If the businesses feel that they are still stuck, they can connect with the leaders in the Domain NSKT Global for assistance from their highly experienced experts. NSKT Global being one of the top firms in UAE dealing in ESR filling helps and assists in all areas related to ESR.

NSKT Global (USA Office)
1564 Market Place Blvd Suite 400 PMB 328
Ocean Isle Beach, NC 28469
Email:- usoffice@nsktglobal.com
Phn:- 888 701 675
888 701 NSKT
https://www.nsktglobal.com/usa

NSKT Global (UAE Office)
Level 14, Boulevard Plaza Tower 1,
Downtown, Dubai, UAE PO 334155
Phn +971 44 394 263
Whatsapp +971 55 171 2487
Email:- uae@nsktglobal.com
https://nsktglobal.com/uae

At NSKT Global we provides the complete range of advisory services to the SMEs as well as to the established businesses. Dealing in the industry for over 10 years. In countries across globe Namely UAE, USA and India.
contact us
https://www.nsktglobal.com/contact-us.php

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