Economic Substance Regulations


The Registrar of Companies (“Registrar”) is the Regulatory Authority designated in the DIFC for the purposes of the UAE Economic Substance Regulations (“ESR”).

The UAE enacted Economic Substance Regulations (Cabinet of MinistersResolution No. 31 of 2019) on 30 April 2019 and released Guidance (Ministerial Decision 215 of 2019) on the application of the Regulations on 11 September 2019. The Regulations and guidance applies in all UAE jurisdictions, including financial free zones such as the DIFC.

In consultation with the OECD and the EU, amendments to the ESR were made by Cabinet of Ministers Resolution No. (57) of 2020 (“Amended ESR”) issued on 10 August 2020, along with an updated Guidance (Ministerial Decision No. (100) of 2020, “Amended Guidance”, which contains an updated Relevant Activities Guide at Schedule 1). The Amended ESR appoints the Federal Tax Authority as National Assessing Authority that will determine whether an entity meets the Economic Substance Test and issues penalties for contraventions of the Amended ESR.

In accordance with the Amended ESR and Amended Guidance, all DIFC firms that conduct one or more “Relevant Activities” are required to submit an Economic Substance Notification (“Notification”) and/or an Economic Substance Report (“Report”), electronically on the Ministry of Finance Portal (“MOF Portal”), even if they have already filed a Notification on the DIFC Portal.

Please refer to the Notice from the Ministry of Finance in relation to ESR Filing Requirements and Deadlines on the MOF Portal.

Key points to note about ESR and how to prepare your business for it are set out below:

1. The relevant UAE Economic Substance Legislation can be found at the Ministry of Finance Website.

2. The UAE Ministry of Finance has issued Ministerial Decision No. 100 of 2020 that includes a Relevant Activities Guide which should assist you in determining whether your business:

  • conducts a relevant activity and falls within the scope of the Amended ESR; and/or is an Exempted Licensee under the Amended ESR.

3. All UAE firms conducting a Relevant Activity in the UAE are required to file Notifications and Returns on the MOF Portal, regardless of their jurisdiction of incorporation or registration in the UAE.

4. Firms that fall under the definition of Exempted Licensee under the Amended ESR and Amended Guidance, are still required to file a Notification on the MOF Portal but are not required to file a Report.

5. Notifications and Reports must be submitted electronically on the MOF Portal, which can be accessed here. DIFC has developed a quick guide to help you create a MOF portal account and access the MOF ESR Portal, including key guidelines, which can be viewed here.

6. The filing deadline for Notifications on the MOF Portal for DIFC Firms with a financial year starting on or after 1 January 2019 and ending on or before 30 June 2020, is 31 January 2021. Failure to file a Notification will result in a penalty of AED 20,000 under Article 13 of the Amended ESR.

7. The filing deadline for Reports on the MOF Portal for relevant DIFC firms with a financial year starting on or after 1 January 2019 and ending on or before 31 December 2019, is 31 January 2021. Failure to file a Report will result in a penalty of AED 50,000 under Article 14 of the Amended ESR. Exempted Licensees are not required to file a Report.

While it is each DIFC entity’s responsibility to evaluate their obligations under the ESR, determine whether it conducts a Relevant Activity and ensure compliance with the regulations, the DIFC will provide support by conducting outreach sessions and general enquiries can be directed to or you can call us on +971 (0)4 362 2222. The DIFC will not be able to provide specific advice relating to your entity, confirm whether it conducts a relevant activity, or whether it meets the economic substance test.


Economic Substance FAQs

  • Q1- What are the Economic Substance Regulations (“ESR”) and why did the UAE government enact them?
  • Q2- When did the ESR come into force?
  • Q3- Who does the Economic Substance Regulations apply to?
  • Q4- What are the Relevant Activities?
  • Q5 - Do the Economic Substance Regulations apply in the DIFC?
  • Q6- Are the Economic Substance Regulations applicable to DIFC entities?
  • Q7- What is the Economic Substance Test?
  • Q8- What do DIFC entities need to do in the short term?
  • Q9- Which DIFC entities need to file a Notification and by when?
  • Q10– Who is exempt from filing a Notification?
  • Q11- Who is exempt from filing a Report?
  • Q12- Can a single Notification and Report be filed for multiple entities?
  • Q13- What is the Reportable Period referred to in the Notification?
  • Q14- What are the key compliance requirements of an entity carrying out Relevant Activities under the Regulations?
  • Q15- What are the penalties under the Regulations?
  • Q16- Where can I find out more information about Economic Substance?


Economic Substance Outreach Presentations


  • Dec 2019
  • May 2020
  • Nov 2020