Economic Substance Regulations
ESR Consulting Services in the UAE
The UAE Economic Substance Regulations (ESR) no longer apply to financial years starting on or after 1 January 2023. They still apply to 2019 to 2022, and businesses that missed filings for those years need to put them right. Alif Accounting & Tax Consultants helps you check your position and complete any outstanding ESR filings.
What changed
Do the Economic Substance Regulations still apply?
The UAE introduced the Economic Substance Regulations in line with its commitment to international tax standards set by the OECD and the European Union. Businesses carrying on certain relevant activities had to show adequate substance in the UAE: enough employees, physical presence, management and operating expenditure, with their core income-generating activities carried out in the country.
Under Cabinet Decision No. 98 of 2024, ESR no longer applies for financial years starting on or after 1 January 2023. It remains in force for financial years from 1 January 2019 to 31 December 2022, so any business that did not submit its ESR notifications or reports for those years still needs to file them.
ESR at a glance
Financial years from 1 January 2019 to 31 December 2022
ESR no longer applies for financial years starting on or after 1 January 2023
Cabinet Decision No. 98 of 2024
Notifications and reports for 2019 to 2022 still need to be submitted
Who it applied to
Relevant activities under ESR
For the 2019 to 2022 financial years, ESR applied to UAE businesses carrying on one or more of these relevant activities:
- Banking businesses
- Insurance businesses
- Investment fund management businesses
- Lease-finance businesses
- Headquarters businesses
- Shipping businesses
- Holding company businesses
- Intellectual property businesses
- Distribution and service centre businesses
What we do
Our ESR services
ESR position review
We check whether your business carried on a relevant activity in 2019 to 2022 and which filings were due.
Outstanding filings
We prepare and submit any missing ESR notifications and reports for those years.
Substance assessment
We assess whether the business met the substance test in each year, using your records.
Corporate tax alignment
ESR has been replaced in practice by corporate tax rules. We make sure your corporate tax position is in order.
Close out your ESR position
Book a free consultation. We will check whether any ESR filings for 2019 to 2022 are outstanding and what to do about them.
FAQs
ESR in the UAE, frequently asked questions
No, not for financial years starting on or after 1 January 2023, under Cabinet Decision No. 98 of 2024. They still apply to financial years from 1 January 2019 to 31 December 2022.
Those years are still covered, so any missing notifications or reports should be submitted as soon as possible. We can review which filings were due and prepare them for you.
UAE businesses carrying on relevant activities, such as banking, insurance, investment fund management, lease-finance, headquarters, shipping, holding company, intellectual property, and distribution and service centre businesses.
ESR was not directly replaced, but UAE businesses are now subject to corporate tax, which brings its own registration, filing and substance-related conditions, for example for free zone companies.