Economic Substance Regulations (ESR)
Don’t Risk the Penalty.
ABT’s FTA-certified team handles your ESR notifications, annual filings, and full compliance — protecting your UAE business from severe regulatory penalties.
FTA-
Certified
500+
Registered
Zero Penalties
100% Compliant
ESR Services Dubai | Economic Substance Regulations Compliance
Free zone and mainland companies engaged in banking, insurance, holding, intellectual property, leasing, distribution, or shipping activities still carry economic substance obligations, even though annual ESR filing UAE has changed. ABT’s ESR services Dubai help you stay compliant, resolve past filings, and protect your business from penalties.
Protect Your Business: Understanding ESR Penalties
Penalties apply to the entities that failed to file required ESR notifications or reports during the ESR period (2019-2022).
AED 20,000
Failure to Submit Notification
AED 50,000
Failure to Submit Report
AED 50,000
Failure to Meet the Substance Test (First Year)
AED 400,000
Failure to Meet the Substance Test (Second Consecutive Year)
NOTE: Any penalties imposed for financial years beginning after 31 December 2022 have been cancelled and are refundable. Contact ABT to check your eligibility for a refund.
Is Your Business ESR-Compliant? Find Out Before the Deadline.
Don’t leave your business exposed to penalties of up to AED 400,000. Take the ABT Eligibility Check today. Our experts will analyze your “Relevant Activities” and ensure your substance filings are 100% accurate and on time.
What we offer
9 Relevant Activities Under UAE ESR
Intellectual Property Business
Companies that earn income from the licensing or sale of intangible assets like trademarks, patents, and copyrights.
Insurance Business
Entities providing insurance and reinsurance services, including risk coverage and claims management, must comply with ESR.
Investment Fund Management
Firms provide discretionary investment management services to funds, including managing the fund’s underlying assets.
Lease–Finance Business
Businesses that provide credit, loans, or leasing assets in exchange for interest or financial return are subject to ESR.
Headquarters Business
Entities providing strategic management or administrative support for other companies within the same group.
Banking Business
Financial institutions operating in the UAE conducting core banking activities must demonstrate adequate substance.
Shipping Business
Companies operating ships in international traffic for the transport of passengers or cargo are required to file ESR.
Distribution & Service Center
Businesses distributing goods or providing services for a foreign company within the UAE are subject to ESR.
Holding Company Business
Pure equity holding companies have simplified ESR requirements but must still file annual notifications.
ESR Changes: What Cabinet Decision 98/2024 Meant For You
With the introduction of Corporate Tax, the rules for Economic Substance Regulations UAE have changed significantly. Here is the plain-English explanation of Cabinet Decision 98/2024 to know where your business stands today.
What Changed?
If your financial year started on or after January 1, 2023, you are generally no longer required to file ESR Notifications or Reports, because the UAE Corporate Tax law now handles “substance” requirements. To simplify business operations, the government has removed the need for dual reporting under both ESR and Tax regimes.
What Didn’t Change?
However, you are still legally required to have filed for all years before 2023, especially between 2019 and 2022. FTA still audits your past ESR filings. If you missed a deadline or failed a substance test between the mentioned periods, penalties still apply and must be settled. You must maintain all ESR-related records for at least 6 years from the end of the relevant financial period.
What To Do Next?
Ensure your filings for 2019–2022 are accurate and complete to avoid penalties and fines.
Ensure your business is registered for Corporate Tax, through which the government views your economic activity.
You need to ensure your accounting reflects the “substance” required under the Corporate Tax Law.
What do you need?: Your Strategic Compliance Roadmap
Our ESR services Dubai we provide meet your needs professionally and in compliance with FTA regulations and the Ministry of Finances requirements.
Complete outstanding ESR filings
Ensure all pre-2023 ESR obligations are 100% complete.
Check for penalty refund
Get an expert review of your eligibility for penalty refunds.
Understand ESR’s impact on Corporate Tax
Align your ESR compliance with the corporate tax system.
Requirements UAE Companies Must Meet
If your company performs one of the aforementioned relevant activities and earns money from it, it must meet these 3 requirements:
1. Core Income Generating Activities (CIGA) Test
The actual work that you gain money from must be performed inside the UAE. You cannot outsource the core work of your business to a partner company or third party outside the UAE.
2. The Management Test
The company must be managed within the UAE through holding periodic board meetings with the legal quorum of directors present in the UAE and documenting all minutes and decisions.
3. The Adequacy Test
The company must have a sufficient number of qualified employees, adequate operating expenses within the UAE, and an actual office that matches the scale of its activities.
ESR Filing Deadlines Timeline
To ensure compliance for the period 2019 – 2022, businesses must understand that there are two filing requirements with their deadlines. Here we break down the filing timeline:
ESR Notification
It is required to inform the Ministry of Finance that your company performed a relevant activity during the financial year, regardless of making profit or not. It must be filed within 6 months from the end of the company’s financial year.
ESR Report
It is required to provide detailed evidence that the company passed the Economic Substance Test. It is obligatory if the company made a profit from the relevant activity. It must be filed within 12 months from the end of the company’s financial year.
What we offer
Why choose ABT’s ESR services in Dubai?
ABT’s ESR services in UAE — 6 reasons behind why 500+ UAE businesses trusted us:
FTA-registered Tax Agency
Our filings and recommendations we provide are recognized by the UAE Federal Tax Authority.
Historical Case Experience
We’ve resolved FY2019–2022 ESR notification UAE, reports, and penalty appeals, including overdue and complex cases.
Freezone & Mainland Coverage
We have more than 12 years of experience in Freezone rules and mainland obligations, maintaining compliance and success.
Clear Guidance
Our team explains clearly what applies to your business, the roadmap, and the timeline, making the matters clear and specific.
ESR Specialist
We are specialized in ESR as one of our core services, including its link to Corporate Tax and QFZP status.
Up-to-date with Changes
We track FTA and Ministry of Finance updates regularly to ensure your 100% compliance based on the current rules.
Ready to start your journey with our ESR’s experts?
Don’t let unresolved ESR obligations or substance gaps put your corporate tax benefits at risk. Our specialists make compliance simple, reviewing your filings, resolving outstanding issues, and securing your QFZP status with confidence. Choose ABT that stays ahead for every regulatory change. Book your free ESR compliance UAE review today!
What you will get:
- Full assessment of 2019–2022 filings.
- Evaluation of penalty recovery eligibility.
- A clear roadmap under Cabinet Decision 98/2024.
Got Questions?
Frequently Asked Questions
Everything you need to know about tax and accounting services in the UAE.
Is ESR still applicable in the UAE in 2025/2026?
No. The corporate tax system covers the same requirements of ESR for business after 2023. However, the FTA can audit businesses in the financial years between 2019 and 2022.
What are the penalties for ESR non-compliance in UAE?
Businesses that failed to submit ESR notifications have to pay AED 20,000, and those that failed to submit ESR reports have to pay AED 50,000. Failure to meet the ESR test costs an AED 50,000 penalty for the first year, and if it is repeated, it costs AED 400,000.
Do free zone companies need to comply with ESR?
Yes. The regulations apply to all UAE entities that carry out a “Relevant Activity”.
Do exempt entities still need to file the ESR notification?
Yes. Even if your company meets the criteria for “Exempted Licensee” status which means it is a tax resident outside the UAE or fully owned by UAE residents and stays within the UAE, you must still file an annual Notification.
What happens if my company failed the Economic Substance Test?
The consequences are a fine of AED 50,000 for the first year of failure. For a repeated failure in the following year, the fine will be AED 400,000.
Can a company outsource its activities and still comply with ESR?
Yes, but with strict conditions. A company can outsource its “Core Income Generating Activities” (CIGA) to a third-party service provider or a group entity, provided that: The outsourced activity must be performed within the UAE, the company must demonstrate that it has full supervision and control over the outsourced activity, and the provider must have enough employees and office space to cover its own business.
How it Works
Need Help with ESR Compliance?
Our experts help UAE businesses meet Economic Substance Regulations accurately, efficiently, and on time.