UAE Modifies Economic Substance Regulations Reporting Requirements Under Cabinet Decision No. 98

The UAE Ministry of Finance has modified the scope of the Economic Substance Regulations (ESR) under Cabinet Decision No. 98 of 2024, according to GoStride Ventures. Under the decision, companies carrying out relevant activities are no longer required to submit annual ESR notifications or reports for financial years ending after December 31, 2022.

The policy shift aims to eliminate duplication as economic substance compliance is integrated into the federal Corporate Tax framework.

Businesses remain obligated to maintain compliance documentation for financial years ending between 2019 and 2022 for a minimum of six years. This record-keeping requirement applies to address potential audits conducted by the Federal Tax Authority.

Additionally, free zone entities seeking the 0% Corporate Tax rate as Qualifying Free Zone Persons must continue to demonstrate adequate substance within the zones.