Find out whether ESR still affects your company. Reporting has ended for recent years, but earlier obligations and FTA requests remain. PROXPAT organises your records and coordinates with your tax adviser.
Page last updated: . Requirements, government fees and processing times are set by the relevant UAE authority and can change.
Economic Substance Regulations (ESR) in the UAE: What Still Applies
The UAE's Economic Substance Regulations (ESR) required companies carrying on certain "relevant activities" to show adequate economic presence in the country and to file annual notifications and reports. In October 2024 the Ministry of Finance announced that Cabinet Decision No. 98 of 2024 had cancelled ESR reporting for financial years ending after 31 December 2022.
That does not wipe the slate clean for earlier years. This page explains what ESR required, what changed, and what companies still need to deal with, based on the Ministry of Finance's ESR page and its announcement.
Please note: this page is not tax advice. Confirm your company's position with a registered tax agent.
The Legal Framework
| Instrument | Role |
|---|---|
| Cabinet Resolution No. 31 of 2019 (30 April 2019) | Introduced the Economic Substance Regulations |
| Cabinet Resolution No. 57 of 2020 (10 August 2020) | Replaced Resolution No. 31 of 2019 |
| Ministerial Decision No. 100 of 2020 (19 August 2020) | ESR guidance |
| Cabinet Decision No. 98 of 2024 | Amended Resolution No. 57 of 2020 and cancelled reporting for financial years ending after 31 December 2022 |
Relevant Activities Under ESR
ESR applied to entities carrying on any of these activities, as listed by the Ministry of Finance:
Banking business
Insurance business
Investment fund management
Lease-finance business
Headquarters business
Shipping business
Holding company business
Intellectual property business
Distribution and service centre business
What ESR Required
| Obligation | Rule |
|---|---|
| Notification form | Filed annually, including by entities that earned no income from relevant activities |
| Economic Substance Report | Filed within 12 months of the financial year end by entities earning income from relevant activities |
| Consequences of non-compliance | Penalties, spontaneous exchange of information with foreign tax authorities, and administrative sanctions such as suspension, revocation or non-renewal of the trade licence |
What Changed in 2024
On 14 October 2024 the Ministry of Finance announced that Cabinet Decision No. 98 of 2024 cancelled economic substance reporting requirements for financial years ending after 31 December 2022. The Ministry linked the change to the introduction of UAE corporate tax, so businesses could focus on corporate tax compliance.
| Financial year | ESR reporting position |
|---|---|
| Ending on or before 31 December 2022 | ESR obligations for these years still stand |
| Ending after 31 December 2022 | Reporting requirements cancelled by Cabinet Decision No. 98 of 2024 |
What Still Applies
- Earlier years. Companies must still meet ESR obligations for financial years ending on or before 31 December 2022.
- Requests. Companies must respond to information or amendment requests from the regulatory authorities or the FTA.
- Penalties. Penalties imposed by the FTA must still be paid; the announcement does not mention refunds.
If your company was active in 2019 to 2022 and carried on a relevant activity, check that its notifications and any reports for those years were filed.
What Replaced It in Practice: Corporate Tax
Businesses now spend their compliance effort on corporate tax. Every company registers with the FTA, generally within three months of incorporation for new companies, and files a return within nine months of each year end. See corporate tax registration. Holding and intellectual property structures that were ESR-relevant remain worth reviewing for tax. See holding company.
Records Worth Keeping
- Copies of ESR notifications and reports filed for 2019 to 2022, with submission receipts.
- Correspondence and any penalty notices from the authorities or the FTA.
- Board minutes, staff and premises evidence used to show substance in those years.
- Current corporate tax registration and return records.
Keep records organised, and see government documentation processing for managing company files. For current retention periods, see accounting and record keeping.
How PROXPAT Helps
Filing history check for 2019 to 2022
Records and receipts organisation
Coordination with your registered tax agent
Responses to authority requests
Penalty and payment tracking
Corporate tax registration coordination
Licence renewal without compliance blocks
Company document management
Frequently Asked Questions
Stay compliant as the rules change.
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The licence is the start of the government work, not the end of it
Once the trade licence is issued, the sequence that actually lets you operate begins: the establishment card, the MOHRE and immigration files, your employee quota, then employee visas and work permits. After that it repeats every year — renewals, cancellations when people leave, and licence renewal and amendments.
Companies that would rather not build that function in-house put it on a monthly PRO retainer from AED 700, or use it per transaction. Government fees stay separate and itemised either way.
The first six months after incorporation
- Establishment card issued through immigration
- MOHRE file opened and e-signature completed
- Employee quota checked before hiring
- Offer letters, work permits and entry permits
- Medical, Emirates ID and visa stamping
- Corporate tax and VAT registration where they apply
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Close Out Your ESR History
PROXPAT organises your ESR records for 2019 to 2022, tracks any authority requests or penalties, and coordinates with your registered tax agent.