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Economic Substance Regulations

The UAE introduced a Resolution on the Economic Substance (UAE Cabinet Resolution No. 31/2019, as amended, concerning economic substance regulations in the UAE; guidance released by the Ministry of Finance pursuant to Ministerial Decision No. 215/2019; and Cabinet Resolution No. 58/2019, which designates the appropriate UAE authorities to regulate compliance under these regulations, collectively, referred to as the “Economic Substance Regulations” ) on 30 April 2019, as part of the UAE’s commitment as a member of the OECD Inclusive Framework, and in response to an assessment of the UAE’s tax framework by the European Union (“EU”) Code of Conduct Group on Business Taxation.

The Regulations require UAE onshore and free zone companies and other UAE business forms that carry out any of the “Relevant Activities” listed below to maintain an adequate “economic presence” in the UAE relative to the activities they undertake.

  • The Regulations apply to financial years starting on or after 1 January 2019.
  • The Regulations apply to UAE onshore and free zone companies, branches, partnerships, and other UAE business forms (referred to as Licensees) that carry out any of the following Relevant Activities.
    • Banking Businesses
    • Insurance Businesses
    • Investment Fund Management Businesses
    • Lease-Finance Businesses
    • Headquarter Businesses
    • Shipping Businesses
    • Holding Company Businesses
    • Intellectual Property Businesses
    • Distribution and Service Centre Businesses

There are potentially two broad filing requirements under the Regulations:

  • Notification form (to be submitted generally for all companies before 30th June) and
  • Annual substance return (before 31st December 2020, for Assessment year 2019).


Under the ESR, all filing requirements fall under the remit of the relevant Regulatory Authority, and as such it is the Regulatory Authorities that set the requirements, deadlines and format for notification filing as they believe is appropriate and which may vary.

Licensees that are directly or indirectly at least 51% owned by the Federal or an Emirate Government, or a UAE Government body or authority, are exempt from the Regulations.