Strengthening Local Economies: The Impact of Economic Substance Regulations on Genuine Business Presence
Economic Substance Regulations aim to ensure companies operating in a specific region have a genuine economic presence and conduct their core income-generating activities there. This discourages purely shell companies and boosts local economies.
An ESR Audit Intimation informs your business that the authorities have selected it for an ESR audit. The purpose is to assess if your company complies with ESR regulations.
Companies selected for an ESR audit typically fall into two categories:
An ESR Audit Intimation arrives with a tight deadline to respond. Here's what you need to do swiftly:
Recommended by LinkedIn
There are some common triggers for receiving an ESR Audit Intimation. Inconsistencies between what you reported in your Economic Substance Notification (ESN) and your actual operations can raise red flags for authorities.
Additionally, the nature of your business may place it in a higher-risk category for audits, such as those in shipping, banking, or intellectual property holding. Finally, regulatory bodies may also choose companies at random to ensure overall compliance across all industries.
The Intimation won't disclose the specific details of what the auditors will be looking for or the potential consequences of non-compliance. However, it's crucial to take it seriously and act promptly.
By understanding the purpose of the ESR Audit Intimation and taking the necessary steps to prepare, you can demonstrate your company's commitment to ESR compliance and ensure a more positive audit experience.