Is ESR Filing Still Required in the UAE? What You Still Owe

No. For any financial year ending after 31 December 2022, there is no Economic Substance Notification or Report to file. Cabinet Decision No. 98 of 2024, effective 2 September 2024, ended the going-forward ESR filing obligation. That covers FY2023, FY2024, FY2025 and FY2026. Substance itself did not disappear, though. It moved into the Corporate Tax regime, and older years still carry exposure.

Bottom Line

• No ESR Notification or Report is required for any financial year ending after 31 December 2022, per Cabinet Decision No. 98 of 2024.
• ESR still legally applies to FY2019 through FY2022, so unfiled years in that window keep their risk.
• ESR penalties for post-2022 years are cancelled, and fines already paid should be refunded.
• Substance moved into Corporate Tax: a free-zone company still needs adequate substance to keep the 0% rate.
• Some government ESR pages still describe the old annual filing. That is a lag, not a live duty.

What actually changed

The rule that changed is the filing obligation, not the whole regime. Cabinet Decision No. 98 of 2024 amended Cabinet Resolution No. 57 of 2020 and took effect on 2 September 2024. It limits ESR to financial years from 1 January 2019 to 31 December 2022.

Why the change? The government removed duplication between ESR and the newer Corporate Tax Law. Rather than run two overlapping substance systems, it kept one. Alongside that, administrative penalties for years ending after 31 December 2022 were cancelled, and fines already paid are to be refunded.

For context, ESR originally applied to nine Relevant Activities: banking, insurance, investment fund management, lease-finance, headquarters, shipping, holding company, intellectual property, and distribution and service centre. If your company touched one of those, ESR was your concern. Now, for recent years, it is not.

The refund question owners keep asking

The honest answer is that the money is owed to you, but getting it back takes work. If you paid an ESR penalty for a year ending after 31 December 2022, that penalty is cancelled and should be refunded. The catch is process.

It is not fully clear whether refunds are automatic or whether you must approach the Federal Tax Authority yourself. When we have reviewed owner records after the change, we do not assume the money finds its way back on its own. The practical step is to check your ESR and FTA portal records. If a post-2022 penalty still shows as owed or paid, raise it directly with the FTA rather than waiting.

What you may still owe: the 2019-2022 window

ESR was not erased retroactively. It still applies to FY2019 through FY2022. So if your company ran a Relevant Activity in those years and never filed, or filed and failed the substance test, that exposure is still live. This is the part owners tend to overlook once they hear "ESR is gone".

Under the original regime, the notification was due within 6 months and the report within 12 months of financial year-end. The old penalty schedule can still bite for those years.

Those figures come from Articles 13 and 14 of Cabinet Resolution No. 57 of 2020: AED 20,000 for a missed notification, AED 50,000 for a missed report or first-year substance failure, and up to AED 400,000 for a repeat failure in the following year. They no longer apply to years ending after 31 December 2022. They can still apply to FY2019-FY2022. Confirm which of your financial years fell in that window and whether filings were actually made.

Substance did not go away, it moved into Corporate Tax

Filing changed. The underlying discipline did not. Under Federal Decree-Law No. 47 of 2022, a free-zone company must maintain adequate substance to keep the 0% Qualifying Free Zone Person rate, with substance obligations effective for financial periods starting on or after 1 June 2023.

What counts as adequate substance? Per the FTA's free-zone guidance, it means core income-generating activities in the free zone, adequate assets, qualified full-time employees, and adequate operating expenditure. If that list sounds familiar, it should. It is the ESR idea, rehoused under a different law.

One important nuance: the FTA does not publish a minimum headcount or spend threshold. The test is qualitative and proportional to the scale and nature of your income, judged against the level of your activity. A small holding structure and a busy trading company are judged differently. If you want the full picture of how the 0% rate and registration interact, see our guide to corporate tax registration deadlines for existing UAE companies.

Why the government website still says you must file

Because the public pages lag the law. As of mid-2026, the Ministry of Economy & Tourism ESR page still describes annual notifications and reports as required, and the Ministry of Finance material reads similarly. That wording confuses owners who go looking for the current rule.

The binding position is the Cabinet Decision, not the outdated web copy. Trust Cabinet Decision No. 98 of 2024 and the legal guidance built on it. Before you act on any government page that predates it, confirm the current position with your operator.

What to do now: owner checklist

This is quick to describe and worth doing once, cleanly.

• Map your financial year-ends and mark which fell inside 2019-2022.
• Check whether ESR filings and any substance test were completed for those years.
• Verify that any post-2022 ESR penalty is cancelled or refunded on your record.
• Shift attention to Corporate Tax substance if you hold or want the 0% free-zone rate.
• Keep one clean record of decisions, staff, premises and spend in the free zone.

ESR is one line item among several that owners track by date. It sits next to your other filings, so it helps to see the full year at a glance in our owner's compliance calendar. If substance and beneficial-ownership reporting overlap for you, our note on the UBO declaration and goAML covers who actually has to file and when. Keeping these in one place is exactly what our ongoing admin service is built to do.

Frequently asked questions

Do I still need to file an ESR notification or report in 2026?

No. Following Cabinet Decision No. 98 of 2024, no ESR Notification or Report is required for any financial year ending after 31 December 2022. That includes 2023, 2024, 2025 and 2026.

Was ESR abolished completely?

Not retroactively. ESR still legally applies to financial years from 1 January 2019 to 31 December 2022. Only the going-forward filing obligation, for years ending after 31 December 2022, was removed.

I paid an ESR fine after 2022. Can I get it back?

Yes, in principle. The Decision cancels penalties for years ending after 31 December 2022 and provides for refunds of fines already paid. It is not fully clear whether refunds are automatic, so check your record and raise it with the FTA.

Can the FTA still penalise me for old ESR years?

Yes, for FY2019 to FY2022. If your company carried out a Relevant Activity in that window and did not file, or failed the substance test, the original penalties still apply, from AED 20,000 for a missed notification to AED 400,000 for a repeat substance failure.

Does economic substance still matter at all?

Yes. The concept moved into the Corporate Tax regime. To keep the 0% Qualifying Free Zone Person rate under Federal Decree-Law No. 47 of 2022, a free-zone company must maintain adequate substance: real activity, staff, assets and spend in the free zone.

The Ministry website still says I must file annually. Which is right?

The binding position is the Cabinet Decision, which removed the going-forward filing. Some government ESR pages still describe the old annual regime and have not been updated. Confirm with your operator before assuming you owe a filing.

If you are unsure which of your years fall in the 2019-2022 window, or whether your free-zone substance holds up under Corporate Tax, we can check your record and tell you plainly where you stand. Book a call.