ESR in the UAE: What Still Applies in 2026 (and What Replaced It)

If you're searching for "ESR filing UAE," here is the honest, current answer most websites won't give you: Economic Substance Regulations no longer require notifications or reports for financial years ending after 31 December 2022. Cabinet Decision No. 98 of 2024 limited ESR to financial years from 1 January 2019 to 31 December 2022, cancelled penalties issued for later periods, and provided for refunds of penalties already paid for those later periods. Substance requirements didn't disappear, though — they moved into the corporate tax regime, where they now determine whether free zone companies keep their 0% rate. This page covers what you may still need to do, and what to do instead.

ESR in 2026: Your Three Possible Situations

• You never filed for 2019–2022 relevant activities: legacy exposure can still exist for those years — we review whether filings or regularisation are needed for historic periods;
• You were fined for a post-2022 period: those penalties were cancelled — if you paid one, you may be entitled to a refund, which we can pursue with the FTA on your behalf;
• You're still preparing ESR notifications annually out of habit: stop — that compliance effort now belongs in corporate tax substance documentation, where it actually protects something.

Where Substance Requirements Live Now: Corporate Tax

The concept ESR enforced — real people, premises, and expenditure behind UAE income — is now a condition of the free zone 0% rate. A Qualifying Free Zone Person must maintain adequate substance in its zone: qualified employees, adequate operating expenditure, and physical assets proportionate to its core income-generating activities. Fail it and the 0% rate is lost for five tax periods. If your entity used to file ESR for holding, HQ, distribution, IP, or financing activities, that same evidence file — payroll, tenancy, expense ledgers — is exactly what your corporate tax position needs today. See our free zone accounting service for how we build it.

Our ESR-Related Services in 2026

• Legacy ESR review (FY 2019–2022) — assessing whether historic obligations were met and resolving gaps;
• ESR penalty refund claims — recovering cancelled penalties paid for post-2022 periods;
• Substance transition — converting your old ESR documentation into a corporate tax substance file for QFZP purposes;
• Regulator correspondence — handling any residual queries from regulatory authorities or the FTA relating to ESR periods.

Frequently Asked Questions

Do I still need to file an ESR notification in the UAE?

Not for financial years ending after 31 December 2022. Cabinet Decision No. 98 of 2024 limited ESR to financial years from 2019 to 2022. Obligations for those historic years, where unmet, can still need resolution.

I paid an ESR penalty for 2023 — can I get it back?

Penalties imposed for financial years after 31 December 2022 were cancelled, and amounts paid for those periods are refundable. We prepare and follow up refund requests with the FTA.

What replaced ESR in the UAE?

Corporate tax. Substance is now assessed under the corporate tax law — most importantly as a qualifying condition for the free zone 0% rate — rather than through separate ESR filings.

Unsure where your entity stands? Send us your licence and activity details - we'll tell you in one call whether you have legacy ESR exposure, a refund to claim, or simply a substance file to build for corporate tax.

Get an ESR Position Review  |  Call or WhatsApp: +971 52 406 3000