UAE Economic Substance Regulations: checking historical obligations for 2019–2022

Economic Substance Regulations (ESR) are no longer a current annual filing requirement for financial years ending after 31 December 2022. For a business reviewing its records today, the question is whether it has outstanding obligations for earlier periods—not how to prepare a new annual ESR filing for a later financial year.

The ADGM Registration Authority confirms that applicable historical notification, reporting and economic substance test requirements remain for the periods from 1 January 2019 to 31 December 2022. This does not mean that every entity had to submit every filing. Historical scope and any exemptions must be checked for the entity and period concerned.

Start with the financial year, not today’s date

The cutoff concerns when the financial year ends. It is not the date the company was registered, the date of a review or the date on which someone submits documents.

Create a list of the company’s relevant financial periods and their end dates. Separate years ending after 31 December 2022 from earlier periods potentially covered by ESR. Do not turn a historical issue into a recommendation to file ESR for a current year.

Establish whether historical ESR obligations applied

For each relevant period in 2019–2022, review the company’s actual activities, its circumstances and the rules and exemptions for that period. A current licence alone does not establish what the company did in an earlier year or which obligations arose.

Distinguish between a required notification, a required report and satisfying the economic substance test. Do not assume that an exemption from one requirement removes every other requirement. Record the basis for the conclusion and retain the supporting evidence.

Reconcile filings with the underlying records

Bring together the notifications and reports actually submitted, submission acknowledgements, relevant financial and operational records, exemption evidence and correspondence with the competent authority. Compare them period by period rather than treating the presence of one document as proof that the whole historical file is complete.

Where a filing cannot be located, first establish what was required and what was submitted. A missing internal copy is not, by itself, proof of a failure to file. Conversely, the end of ESR for later years does not establish that an earlier obligation was satisfied.

Deal with unresolved historical matters

If an applicable notification, report or substance requirement remains unresolved, clarify its status and the available next steps with the competent authority or the professionals assisting with the case. The action depends on the facts and the historical period; this article does not prescribe a universal correction procedure, deadline or penalty outcome.

Keep authority correspondence and outstanding questions together. This makes it easier to distinguish completed work from matters still requiring a response, including when preparing an acquisition or reviewing a company’s compliance history.

Do not confuse ESR with current tax or banking obligations

The removal of ESR for later financial years does not cancel Corporate Tax, VAT, licensing, banking due diligence or other substance requirements. Those obligations have their own scope and must be assessed separately.

A current Corporate Tax declaration is not an ESR report, and completing one does not resolve the other. Keep current compliance work separate from the review of historical ESR periods.

Questions businesses still need to answer

Do we need an annual ESR filing for a financial year ending after 31 December 2022? No: the ESR requirements cease for financial years ending after that date. This does not remove other reporting or tax obligations.

Did every company have ESR obligations for 2019–2022? No blanket conclusion should be drawn. Check historical applicability and exemptions for the company and each period, including which notifications, reports and substance requirements were relevant.

Does the change erase an unresolved historical matter? No. Applicable requirements for earlier periods remain to be addressed. Establish the actual status rather than assuming that the later change closed the file.

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Official source

UAE Cabinet Decision No. 98 of 2024 amending Decision No. 57 of 2020 — official Arabic Gazette text, pp. 72–73. Article 1 limits the regime to the historical financial years beginning from 1 January 2019 through the financial year ending on 31 December 2022. This is a federal decision, not an ADGM-only exemption. UAE Ministry of Finance — ESR and list of applicable decisions.

ADGM Registration Authority — Economic Substance Regulations.