EconomicSubstanceRegulation

It is mandatory only for entities carrying on a relevant activity as defined under the regulations, such as banking, insurance, holding company, or distribution and service centre activities. Whether it applies to you turns on the actual activities your licence covers and the income you earn from them, not the free zone or mainland status itself.

There is no fixed published fee, since the work depends on how many relevant activities your company carries out and whether a notification, a full report, or both are due. Vigor quotes ESR compliance work after reviewing your licence activities and financial statements, rather than pricing it as a standard package.

The notification and, where applicable, the economic substance report are filed against deadlines set by the relevant regulatory authority for each financial year, and these vary by authority rather than following a single UAE wide date. Businesses should check the specific deadline issued by their licensing authority each year.

Penalties apply for failing to submit the notification or report on time, for providing inaccurate information, or for failing to meet the economic substance test where a relevant activity generates income. The exact amounts are set by the regulations and enforced by the relevant authority, and repeated failures can attract higher penalties.

A relevant activity is one of the categories listed in the regulations, including banking, insurance, fund management, leasing and finance, headquarters, shipping, holding company, intellectual property, and distribution and service centre business. Reviewing your trade licence activities against this list, alongside actual income earned, is the starting point for working out whether ESR applies.

You will generally need your trade licence, financial statements, details of income earned from each relevant activity, and evidence of the people, premises and expenditure supporting that activity in the UAE. The exact documents depend on which relevant activity applies and whether a notification alone or a full report is required.