UAE announces cancellation of economic substance reports requirement after December 31, 2022

The UAE announced the cancellation of the requirements for companies to submit Economic Substance Notifications and Reports for financial years ending after 31 December 2022.

This follows Decision No. 98 of 2024, which amends Decision No. 57 of 2020 on the Economic Substance Regulations. The move was announced by the Ministry of Finance.

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What are ESR?

According to the Ministry of Finance website, the ESR require "UAE onshore and free zone companies and certain other business forms that carry out certain activities to maintain and demonstrate an adequate “economic presence" in the UAE relative to the activities they undertake." This is to ensure that UAE entities report actual profits that are corresponding to the economic activity undertaken within the UAE.

These regulations applied to licensees that carry out the following activities:

• Banking Businesses
• Insurance Businesses
• Investment Fund Management Businesses
• Lease-Finance Businesses
• Headquarter Businesses
• Shipping Businesses
• Holding Company Businesses
• Intellectual Property Businesses
• Distribution and Service Center Businesses

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