Economic Substance Regulations

Economic Substance Regulations require companies operating in certain jurisdictions to demonstrate meaningful economic activity and presence there, rather than just existing for tax advantages. This means they must have actual staff, premises, and operations that reflect their claimed activities. The goal is to prevent companies from abusing tax laws through artificial arrangements. Essentially, these rules promote transparency and ensure that companies engaged in activities in a jurisdiction genuinely contribute to its economy, rather than using it solely for tax benefits.