ESR no longer sorts companies by activity. It sorts them by history.
Cabinet Decision No. 98 of 2024 cancelled the ESR notification and report for every period ending after 31 December 2022, and the penalties with them. ESR now survives only backward, in three positions. Read across them to know whether your file is closed or a thread is still open.
Set up from 2023 onward
ESR never applied to you. Nothing to notify, nothing to report, no period to revisit. Any template asking you to file an ESR notification this year reads from a retired rulebook.
Operating across the change
If your company predates 2023, the only ESR question is backward: was each year from 2019 to 2022 handled correctly at the time. If so, the file is closed. If a Relevant Activity went unreported, pull that thread now.
The only ESR that can still biteCarrying a legacy penalty
Penalties for periods ending after 31 December 2022 were cancelled and, where paid, refunded. A penalty tied to a 2019 to 2022 year is different: it can still be live. Confuse the two and a settled matter gets paid twice.
ESR is gone. "Economic substance" is not.
This is where founders, and more than a few advisers, get caught. The ESR filing cycle is retired, but the phrase economic substance survives in a different law and carries real money. Two separate things, one name.
The ESR substance test
Relevant Activities, FY 2019 to 2022
Asked whether core activity, management, staff, premises, and spend sat in the UAE. It produced two filings. Discontinued, with no current return to defend.
No filing, no live exposureQFZP substance, under Corporate Tax
A condition of the 0% rate
A free zone company needs adequate UAE substance to keep its Qualifying Free Zone Person status. Get it wrong and the rate moves, not a filing fee.
This is the one most mistaken for dead ESRWho ESR caught, while it ran.
If your only exposure is a 2019 to 2022 year, these were the Relevant Activities in scope. The test looked at what the business actually did, not the wording on the licence, which is where in-scope years were misjudged.
The point in 2026: none of this is a current obligation. It matters only if a 2019 to 2022 year carried one of these activities and was not reported correctly. For a company operating now, act on the live list below.
The list that actually recurs.
The energy that once went into an ESR cycle belongs here. Four duties genuinely repeat once a UAE licence is issued, easy to list and easy to underestimate.
Corporate Tax
Registration, then an annual return. The 9% rate applies above the AED 375,000 profit threshold, with Small Business Relief up to AED 3M revenue for eligible businesses. The thresholds are eligibility facts; where you land within them is judgement.
VAT, where registered
Cross the registration threshold and VAT brings its own returns and records. Many smaller firms sit below it and carry no VAT duty. Knowing which side of the line you are on is part of the work.
Bookkeeping and UBO
Accounts to an acceptable standard, and Ultimate Beneficial Owner records kept accurate and current. UBO is the recurring cousin once confused with ESR. Unlike ESR, it has not gone anywhere, and it is checked.
Trade-licence renewal
The licence renews on its own clock, and a quiet lapse costs in fines and reinstatement. The most basic recurring duty, and the one most often left to drift after launch.
Our corporate tax and VAT page sets out the live regime in full, and our bookkeeping page covers the records that keep it defensible. In a free zone, confirm your financial centres and free zone substance position directly.
We read the law as it is now, not as a checklist remembers it.
Half of compliance value is knowing what to stop doing, and ESR is one of those. We will not bill effort against a retired rule. Nor will we let a live one, your free zone substance position, your UBO record, a 2019 to 2022 year never closed, sit unattended because it shared a name with something that ended. One clear read of where you stand, in writing, and the guessing stops.