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Cabinet Decision 98 of 2024 amended the original Cabinet Decision 57 of 2020 to discontinue Economic Substance Regulations for any financial year ending after 31 December 2022. The Ministry of Finance announced it on 14 October 2024. In practical terms: a company with a calendar-year FYE has not owed an ESR filing since the FY2022 cycle and will not owe one going forward.
The international pressure that produced ESR has also lifted. The EU Code of Conduct Group on Business Taxation removed the UAE from its substance-monitoring list in its 13 June 2024 report. The economic substance regulations uae repealed framework existed because the EU wanted reassurance that the UAE wasn't a base for "harmful tax practices". Once UAE Corporate Tax (Federal Decree-Law 47 of 2022) introduced its own substance test for Qualifying Free Zone Persons, the parallel ESR machinery became redundant.
A note of caution for readers who arrive here via a Google search: several commercial guides ranking in the top 10 for "esr compliance uae" still write as if ESR is a live 2026 filing obligation. They walk through notification deadlines, threaten readers with AED 50,000 penalties, and never mention Cabinet Decision 98 of 2024. Any guide claiming ESR is a 2026 filing obligation is out of date. The repeal is documented in supporting materials on the Ministry of Finance and UAE Government portals, and the Big-4 firms (PwC, KPMG, K&L Gates, Clyde & Co) have all confirmed it in client alerts.
The answer to "is esr still required in uae 2026" depends entirely on which of three buckets you fall into. Most articles published before October 2024 collapse all of this into a single filing walkthrough — that's the mistake to avoid in 2026. Each bucket has a different obligation, a different portal, and a different deadline.
You have outstanding FY2019, FY2020, FY2021, or FY2022 ESR notifications or reports. The repeal does not retroactively cancel these. They remain owed, the penalty schedule still applies, and the MoF ESR portal is still operational for legacy filings.
You paid an ESR penalty for a financial year ending after 31 December 2022. Under Cabinet Decision 98 of 2024, that penalty is refundable. The MoF e-services portal handles the claim, with the FTA processing it as the National Assessing Authority.
You operate a UAE free zone entity and still need to maintain substance. That obligation moved to UAE Corporate Tax. You'll satisfy it through the Qualifying Free Zone Person regime, not through ESR.
Each bucket has its own walkthrough below.
Don’t want to figure this out alone? Sarmat is a KHDA-certified training provider and registered typing centre in Deira, Dubai. Message us on WhatsApp — we answer questions like this every day.
This is the only live ESR obligation in 2026. Any licensee that failed to file notifications or reports for the four legacy financial years still owes those filings, and the original penalty schedule still applies.
esr.mof.gov.ae remains operational for legacy filings. Login via the original licensee credentials; backdated notifications and reports must reference the correct financial year.Practical note: if you have a legacy filing outstanding, file as soon as possible. The FTA has not announced an amnesty for the FY2019–2022 backlog — the only amnesty announced under Cabinet Decision 98 of 2024 applies to penalties already paid for FY2023 and later periods. Voluntary disclosure ahead of an FTA enquiry generally produces a better outcome than a desk audit triggered by mismatched corporate tax filings.
This section is the one most competitor guides miss entirely. If you paid any ESR administrative penalty for a financial year ending after 31 December 2022, that penalty has been voided by Cabinet Decision 98 of 2024 and is refundable. Here is the operational walkthrough.
The penalty must relate to a financial year ending after 31 December 2022. Penalties for FY2019, FY2020, FY2021, or FY2022 remain enforceable and are not refundable.
You will need the original penalty notice, proof of payment (bank transfer confirmation or FTA receipt), the entity's commercial licence, and — if filing on behalf of the licensee — the legal authorisation document (POA or board resolution).
Log into the Ministry of Finance e-services portal at eservices.mof.gov.ae and locate the ESR penalty refund request form. Upload the documentation from Step 2, complete the entity details, and submit. The request flows through MoF e-services but is processed by the FTA in its capacity as the National Assessing Authority for ESR.
Processing time has not been published by the MoF, and the operational guidance is still settling. Track the request via the e-services dashboard. Once the refund clears, keep the confirmation — your CT auditor may request it as evidence of a clean compliance history.
Edge case: if you are mid-dispute with the FTA on an ESR penalty for a post-2022 period, file the refund request anyway. The dispute becomes moot once the underlying obligation no longer exists. Notify your tax advisor so the dispute can be formally withdrawn alongside the refund request.
For free zone entities seeking the 0% Corporate Tax rate, the substance test that mattered under ESR has moved into the Qualifying Free Zone Person rules under Article 18 of Federal Decree-Law 47 of 2022. This is the live substance test in 2026 — not ESR.
The QFZP substance requirement asks the entity to maintain adequate substance in the free zone, proportionate to the qualifying income it earns. In practice, that means:
The conceptual lineage to ESR is direct. The CIGAs concept under ESR mapped substance to relevant activities; the QFZP test maps adequate substance to qualifying income. What changed is the filing channel: there is no separate substance portal. Substance is now declared as part of the corporate tax return on EmaraTax, alongside the entity's CT computation. The choice between mainland and free zone status is more consequential than ever — see our guide to choosing between mainland and free zone for the strategic context.
ESR was introduced in 2019 because the EU Code of Conduct Group on Business Taxation needed assurance that the UAE was testing substance for "harmful tax practices". UAE Corporate Tax, introduced in 2023 under Federal Decree-Law 47 of 2022, now performs that role for free zone entities through the QFZP regime. The EU removed the UAE from its substance-monitoring list on 13 June 2024. Cabinet Decision 98 of 2024 closed the parallel ESR machinery the following autumn. The repeal is a regulator cleanup, not a relaxation — substance still matters, but it lives inside corporate tax now. For 2026 deadlines and CT filing mechanics, see our UAE Corporate Tax deadlines guide.
For readers reviewing backward filings, ESR applied only to licensees carrying on one or more of these activities during the relevant financial year:
If your FY2019–2022 returns claimed none of these activities, you may have been outside the regime even in the years it was live — in which case your obligation was limited to a notification confirming no relevant activity.
If you're unsure whether you have an FY2019–2022 backlog, whether you qualify for a refund of penalties already paid, or whether your free zone licence still meets the new corporate tax substance test, message Sarmat on WhatsApp for a 30-minute ESR cleanup and CT substance review. Sarmat's team processes these filings, tracks the regulatory updates as they're announced, and watches founders panic over outdated guidance — we'll cut through the noise and tell you exactly which of the three buckets applies to you. If you're also setting up a new UAE entity, the Setup track of our 100-Step Business Accelerator covers compliance design from day one.
No. Cabinet Decision 98 of 2024, announced by the Ministry of Finance on 14 October 2024, discontinued ESR for any financial year ending after 31 December 2022. No notifications or reports are owed for FY2023, FY2024, or FY2025. ESR remains a live obligation only for legacy financial years — FY2019, FY2020, FY2021, and FY2022 — where filings were never submitted. If you're worried about a 2026 filing deadline, you don't have one.
Cabinet Decision 98 of 2024 is the UAE Cabinet of Ministers' amendment to Cabinet Decision 57 of 2020, the original ESR framework. It discontinued ESR filing obligations for financial years ending after 31 December 2022 and voided administrative penalties imposed for that period. Penalties already paid are refundable through the MoF e-services portal at eservices.mof.gov.ae, with the FTA processing the refund as the National Assessing Authority. The Ministry of Finance announced it on 14 October 2024 and listed it in supporting documents on the official mof.gov.ae portal.
Yes. Cabinet Decision 98 of 2024 voided ESR penalties for any financial year ending after 31 December 2022, and penalties already paid are refundable. Submit the request via the MoF e-services portal at eservices.mof.gov.ae with the original penalty notice, proof of payment, the entity's commercial licence, and any authorisation document. The FTA processes the refund as the National Assessing Authority; the MoF has not published a fixed processing timeline. Penalties for FY2019–2022 filings are not refundable — those obligations remain enforceable.
ESR remains a live obligation for the FY2019, FY2020, FY2021, and FY2022 financial years. Any entity that failed to file notifications or reports for those years still owes them, and the original penalty schedule applies — AED 20,000 for a missed notification, AED 50,000 for a missed report, and up to AED 400,000 for repeat offences or false information. Records must be retained for 6 years from the end of the relevant financial year.
Yes, but through a different mechanism. UAE Corporate Tax under Federal Decree-Law 47 of 2022 now tests substance for free zone entities through the Qualifying Free Zone Person regime in Article 18. Qualifying entities must maintain adequate substance in the free zone — qualified employees, operating expenditure, and physical assets proportionate to qualifying income. Substance is declared via the corporate tax return on EmaraTax, not through a separate ESR portal.
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