The UAE Economic Substance Regulations are finished. Cabinet Decision No. 98 of 2024 amended Cabinet Decision No. 57 of 2020 so that ESR applies only to financial years from 1 January 2019 to 31 December 2022. If your financial year ended after 31 December 2022 you owe no ESR notification, no ESR report and no substance test.
What was cancelled
All three obligations fall away for financial years ending after 31 December 2022: the annual notification, the economic substance test, and the ESR report. The decision took effect on 2 September 2024 and was announced by the Ministry of Finance on 14 October 2024.
Administrative penalties already issued for those later periods are cancelled, and the Ministry has said penalties already paid for them are to be refunded. If you were fined for a 2023 or 2024 financial year, that fine should no longer stand — it is worth checking your status on the Ministry of Finance portal rather than assuming it was written off automatically.
What still applies
ESR has not been erased retrospectively. Financial years from 2019 through 2022 remain in scope, and filings, assessments and penalties for those years stand. If you had a relevant activity in that window — banking, insurance, investment-fund management, lease-finance, headquarters, shipping, holding-company, intellectual-property, or distribution-and-service-centre business — those years can still be reviewed, and the supporting records still need to be retained.
Where the substance question went
Substance did not stop mattering; it moved. From 1 June 2023 the questions ESR used to ask — are the people, the decisions and the expenditure genuinely here? — are asked inside the Corporate Tax regime instead, under Federal Decree-Law No. 47 of 2022. For a free-zone business the sharpest version of that test is whether it holds up as a Qualifying Free Zone Person, and for anyone with related-party dealings it is whether the pricing is defensible. Both are live, and both are examined.
First published in September 2019 as ESR was introduced. Rewritten in August 2026 for the position after Cabinet Decision No. 98 of 2024. General information, not advice on your own position.