Ongoing Obligations


On 30 April 2019, the UAE introduced Economic Substance Regulations (Cabinet of Ministers Resolution No. 31 of 2019), (the “ESR”).

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 (persons licensed by a competent authority in the UAE to carry 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. 31 of 2019 concerning Economic Substance Regulations, as amended by Cabinet Resolution No. 7 of 2020 (Regulations),
  • Ministerial Decision No. 215 of 2019 (Guidance),
  • Cabinet Decision No. 58/2019 on the Determination of Regulatory Competencies, and
  • Cabinet Resolution No. 7 of 2020 amending some provisions of Cabinet Resolution No. 31 of 2019 concerning economic substance regulations.

Application in ADGM

In ADGM, Licensees may include companies, partnerships, foundations or branches of foreign companies or partnerships that are located 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.


In ADGM, the ESR exempts ADGM Licensees who are directly or indirectly owned 51% or more by the UAE Government. This includes the Federal Government, the Government of any Emirate of the UAE or any governmental authority or body.

However, Exempt ADGM Licensees must still file an economic substance annual notification to the Registration Authority.

Economic Substance Requirements

  1. All ADGM Licensees:
  2. All ADGM Licensees, including Exempt Licensees, are required to file an Annual Notification, notifying the Registration Authority of the following:

    1. Whether or not the Licensee is carrying on a Relevant Activity.
    2. If the Licensee is carrying on a Relevant Activity, whether or not all or any part of the Licensee’s gross income in relation to the Relevant Activity is subject to tax in a jurisdiction outside the UAE.
    3. The date of the end of the Licensee’s Financial Year (Accounting Reference Date).
  3. Non-Exempt ADGM Licensees that derive income from the Relevant Activity:
  4. ADGM Licensees that are not Exempt Licensees and 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 Return.

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 forms, filing guidance and useful links and resources to assist ADGM Licensees that are in scope of ESR to understand and comply with its requirements.

ESR Contact Information

For ESR enquiries email:

Relevant activities


Annual notification


Economic substance return


Forms and filing guides




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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