The key date is 31 December 2022

The Ministry of Finance announced that Cabinet Decision No. 98 of 2024 cancelled economic-substance reporting requirements for financial years ending after 31 December 2022. For businesses that began operating later, this means the old annual notification-and-report routine generally does not apply to those later financial years under the amended ESR regime.

Earlier years still need attention

The Ministry also says entities remain responsible for compliance for prior financial years, responding to information or amendment requests from regulatory authorities or the Federal Tax Authority, and paying penalties already imposed. If a company had a relevant activity in an earlier reporting period, it should not assume the records can be discarded just because the filing requirement changed prospectively.

Do not confuse ESR with Corporate Tax substance

ESR and Corporate Tax are separate regimes. The end of ESR reporting does not mean a free-zone company has no substance-related conditions for Corporate Tax, no record-keeping obligations, or no licensing requirements. A Qualifying Free Zone Person may need to demonstrate adequate substance under the Corporate Tax rules to access the relevant tax treatment.

What should a company do now?

Identify its financial years through 2022 and any relevant activities in those periods; locate past ESR notifications, reports and authority correspondence; check for unpaid penalties or open information requests; and keep the documents that support past filings. For later periods, map the obligations under Corporate Tax, VAT, licence conditions and any sector-specific rules separately.

A careful final check

Government pages may retain legacy ESR descriptions alongside the 2024 amendment. The Ministry of Finance’s 14 October 2024 announcement is the clearest public explanation of the change. If the business had past relevant activities or an open case, obtain advice on the exact period and decision that applies.

Official sources and further reading

Rules can change and individual facts matter. These government and regulator pages are the starting point for checking the current position.

GENERAL INFORMATION ONLY · THIS ARTICLE IS NOT LEGAL, TAX, IMMIGRATION OR FINANCIAL ADVICE. CONFIRM THE CURRENT POSITION WITH THE RELEVANT UAE AUTHORITY OR A QUALIFIED PROFESSIONAL.