What ESR Required
Cabinet Decision No. 57 of 2020 required licensees carrying on a Relevant Activity — banking, insurance, fund management, lease-finance, headquarters, shipping, holding company, IP and distribution and service-centre business — to file an annual notification and, where they earned relevant income, an Economic Substance Report demonstrating adequate people, premises and expenditure in the UAE, and that core income-generating activities were performed here.
Why It Still Matters
ESR applied for financial years from 2019 through reporting periods ending on or before 31 December 2022. Open notifications, late or deficient reports and exchange-of-information findings can still attract penalties and reassessment. Groups should close out historic ESR positions rather than assume the regime simply disappeared.
Substance Inside the Tax Regime
With Federal Corporate Tax, the substance question now lives largely within the Qualifying Free Zone Person rules and transfer pricing. The discipline ESR built — mapping activity to people, premises and decision-making — directly supports a defensible QFZP and arm’s-length position today.
Evidence Pack
- 01 Historic ESR notification and report filings reconciled by financial year and entity.
- 02 Relevant Activity assessment and core income-generating activity mapping.
- 03 Substance evidence: headcount, premises, expenditure and board decision records.
- 04 Bridge analysis linking legacy substance files to current QFZP and transfer-pricing positions.