Economic Substance Regulation

An amended set of Economic Substance Regulations (‘ESR’) in the United Arab Emirates (‘UAE’) was issued on 10 August 2020, by way of Cabinet Resolution No. 57 of 2020, thereby revoking the original Cabinet Decision No. 31 of 2019. This was followed by the release of Ministerial Decision No. 100 of 2020, dated 19 August 2020 serving as supplementary guidance with an updated Relevant Activities Guide attached as appendix (collectively referred to as ‘New UAE ESR’). The frequently asked questions (‘FAQs’) on the Ministry of Finance (‘MoF’) website have also been updated to factor in the provisions of the New UAE ESR.

Please refer to the New UAE ESR-related documents available on the following links:

Please note that the New UAE ESR is effective from 1 January 2019 and apply to financial years starting on or after 1 January 2019 to all licensees operating within Shams. Accordingly, Shams licensees are required to re-assess their business activities in light of the New UAE ESR.



The New UAE ESR mandates licensees to file a notification through the MoF’s dedicated ESR portal (‘MoFPortal’), within six (6) months of the licensee’s financial year-end, only if a Relevant Activity has been undertaken during the Reportable Period. The portal has gone live in December 2020. Accordingly, all Shams licensees which undertake the relevant activity(ies) will be required to file a notification on the MoF Portal by the 31st January 2021 (even where they have previously filed such notifications with Shams through email).

Licensees and/or Exempted Licensees that fail to submit their Notification along with the required supporting documents by 31st  January 2021 will be issued a penalty of AED 20,000 under Article 13 of Decision 57 for failure to provide a Notification.

ES reports

The ES reports will also need to be uploaded onto the MoF Portal within 12 months, following the end of the licensee’s financial year-end or by 31st January 2021.

Licensees and/or Exempted Licensees (where applicable) that fail to submit their Economic Substance Report within the aforementioned period shall be subject to a penalty of AED 50,000 under Article 14 of Decision 57 for failure to provide an Economic Substance Report.

MoF Portal has been launched and can be accessed using the below-mentioned link:
Economic Substance Regulations

Click here to view the Ministry of Finance Webinar on 'Economic Substance Regulation Filing Portal'
Click here to view Shams Economic Substance Regulation webinar

Please be advised that Shams member entities are responsible in ensuring full compliance with the New UAE ESR. For any uncertainty regarding the application of the New UAE ESR, Shams recommends consulting a professional advisor.