Economic Substance


On 30 April 2019, the UAE introduced the Economic Substance Regulations (Cabinet of Ministers Resolution No. 31 of 2019), (the “ESR”). On 10 August 2020, amendments were introduced to Resolution 31 by the Cabinet of Ministers by way of Cabinet of Ministers Resolution No. 57 of 2020, which repealed and replaced Cabinet of Ministers Resolution No. 31 of 2019.

The ESR was introduced as part of the UAE’s commitment as a member of the OECD Inclusive Framework, and in response to an assessment of the UAE’s tax framework by the European Union Code of Conduct Group on Business Taxation.

The ESR applies to Licensees (i.e. legal persons and unincorporated partnerships registered by a competent authority in the UAE and that carries out a “Relevant Activity”) across the UAE, including Free Zones and Financial Free Zones, and requires Licensees that carry on a Relevant Activity and derive income from such Relevant Activity to meet the Economic Substance Test (as defined in the ESR).

United Arab Emirates Economic Substance Regime

The Federal Economic Substance Regime consists of:

  • Cabinet of Ministers Resolution No. (57) of 2020 concerning Economic Substance Requirements, and
  • Ministerial Decision No. 100 of 2020 (Guidance).

Application in ADGM

In ADGM, Licensees and Exempted Licensees may include companies, partnerships or branches of foreign companies or partnerships, that are registered in ADGM for financial years commencing on or after 1 January 2019.

The ESR requires ADGM Licensees that carry on one or more “Relevant Activities” and earn income from such activities to have economic substance in the UAE in relation to these activities.

Exempted Licensees

The ESR exempts the following ADGM Licensees from the requirement to meet the Economic Substance Test:

  1. Investment Funds;
  2. Entities that are tax resident in a jurisdiction other than the UAE;
  3. Entities wholly owned by UAE residents and meet the following conditions:
    1. The entity is not part of a MNE Group (as defined in the ESR), and
    2. The entity only carries out business in the UAE;
  4. A branch of a foreign entity, the Relevant Income of which is subject to tax in a jurisdiction other than the UAE.

However, ADGM Exempted Licensees must still file an economic substance annual notification to the Registration Authority along with sufficient evidence substantiating its status as an Exempted Licensee.

Economic Substance Requirements


All ADGM Licensees and Exempted Licensees that carry on one or more "Relevant Activities" are required to file a Notification annually, within 6 months of the end of the financial year of the entity.


ADGM Licensees (not Exempted Licensees) that undertake a Relevant Activity from which they earn income during a relevant Financial Year, are required to:

  1. Meet the Economic Substance Test; and
  2. File an Economic Substance Report.


Economic Substance Filing Portal

The Notifications and Reports must be submitted electronically on the Ministry of Finance Portal, which can be accessed here.

Administration in ADGM

The ADGM Registration Authority is the Regulatory Authority administering ESR in the ADGM.

This section of the website contains information about ESR, as well as useful links and resources to assist ADGM Licensees and Exempted Licensees to understand and comply with its requirements.

ESR Contact Information

For ESR enquiries email:

Relevant Activities

Annual notification

Economic Substance Report


Useful links and resources



Please note that the economic substance related information provided in this section of the website is subject to change, through Federal legislation or guidance, and should not be relied on without seeking independent advice and confirming the currency/validity of the information.

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