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Home Services ESR in the UAE 2025: Relevance and Compliance

ESR in the UAE: Is it Relevant in 2025?

Economic Substance Regulations (ESR) were introduced in the UAE in 2019 in accordance with international OECD standards. The goal is to confirm that companies conduct real economic activities in the country and are not just used as a tool for tax optimization. In 2025, ESR remains relevant only for past periods, as from 2023, the requirements have been integrated into the Corporate Tax system.

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ESR Obligations in 2025

  • From January 1, 2023, the annual submission of ESR notifications and reports is no longer required.
  • The last mandatory reporting period is the financial year ending before December 31, 2022.
  • From 2023, ESR requirements are integrated into Corporate Tax.
  • ❗ If your company was subject to ESR in 2019–2022 and did not submit reports, you are required to do so now.

What Activities Were Subject to ESR?

  • Banking activities.
  • Insurance.
  • Finance and leasing activities.
  • Holding companies.
  • Headquarters.
  • Service centers and outsourcing.
  • Shipping.
  • Intellectual property management.
  • Distribution and logistics.

Penalties for ESR Violations

  • 20,000 AED for not submitting an ESR notification.
  • Up to 50,000 AED for not providing an ESR report.
  • Up to 400,000 AED for being deemed non-compliant.
  • Possible international data exchange under CRS/tax exchange.

Requirements for Companies When Submitting Reports

  • Presence of a physical office in the UAE.
  • Employees on payroll and actual operational expenses.
  • Confirmation of management from the UAE.
  • Readiness for inspections and responses to Ministry of Finance inquiries.

HowTo: What to Do with ESR in 2025

  1. Check if your company conducted activities subject to ESR in 2019–2022.
  2. Verify if notifications and reports were submitted for these periods.
  3. If reports were not submitted, prepare and submit them retrospectively to avoid penalties.
  4. Check corporate structure for compliance with Corporate Tax requirements.
  5. Seek expert assistance for proper closure of ESR and integration into the tax system.
Close ESR Obligations with MIRAD

We help companies submit reports for 2019–2022 and adapt to Corporate Tax, protecting businesses from fines and risks.

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What MIRAD Does

  • Company analysis and verification if it was subject to ESR in 2019–2022.
  • Preparation and submission of ESR Notification and ESR Report.
  • Formation of substance models for companies claiming 0% Corporate Tax.
  • Support during inspections, fines, and appeals.
  • Updating statutory documents and business processes to meet legal requirements.

Why Choose MIRAD

  • We support over 50 companies annually with ESR and Corporate Tax.
  • Deep knowledge of Free Zone and Mainland jurisdiction requirements.
  • We form justifications that pass Ministry of Finance inspections.
  • We maintain clients' access to tax benefits and banking services.

FAQ on ESR in the UAE

❓ Is it necessary to submit ESR in 2025?
✅ No, but if reports for 2019–2022 were not submitted, they must be submitted retrospectively.

❓ Has ESR been replaced by Corporate Tax?
✅ Yes, from 2023, ESR is integrated into Corporate Tax.

❓ What happens if ESR for past years is ignored?
✅ Fines from 20,000 to 400,000 AED and risk of international data exchange.

❓ Which companies were most subject to ESR?
✅ Holdings, financial companies, IP businesses, logistics, and service centers.

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