The UAE Economic Substance Regulations (ESR) apply only to companies conducting “Relevant Activities.” Use this self-assessment guide to determine if ESR applies to your UAE business.
Self-Assessment Questionnaire
Question 1: Is your company a UAE mainland or free zone entity? Yes → continue. No (DIFC/ADGM entity) → DIFC/ADGM have equivalent but separate rules.
Question 2: Does your company conduct any of the following Relevant Activities? Banking, Insurance, Investment Fund Management, Lease Finance, Headquarters (of a multinational group), Shipping, Holding Company, Intellectual Property, or Distribution and Service Centre. If NO to all: ESR does not apply to you. No notification required (confirm this annually as activities may change). If YES to any: continue to Question 3.
Question 3: Does your company earn income from this Relevant Activity? No income at all → ESR Notification still required; state you conduct the activity but earn no income. Any income → ESR Notification AND ESR Report required.
ESR Substance Test: Do You Pass?
For each Relevant Activity you conduct, answer: Are board meetings held in the UAE at least once a year with a quorum physically present? Do you have adequate UAE-based employees for the activity? Is your UAE expenditure proportionate to the activity’s scale? Do you have adequate UAE physical assets or premises? If YES to all: You meet the substance test — record your evidence. If NO to any: You need to address the gap — either increase UAE substance or restructure the activity.