Economic Substance Regulations (ESR) in the UAE are designed to ensure that companies engaged in specific activities have genuine operations and a real economic presence within the country. At Vista Financials Accounting & Taxation, we help businesses understand, assess, and comply with ESR requirements efficiently. Our team ensures your organisation meets every regulatory standard, avoiding penalties and safeguarding your reputation.
The Economic Substance Regulations (ESR) were introduced in the UAE to prevent multinational companies from shifting profits to low-tax jurisdictions without having real business activity there. These regulations ensure that companies claiming UAE tax residency have genuine operations, employees, and decision-making functions within the country.
To comply, UAE businesses engaged in “Relevant Activities” must demonstrate real economic presence and file annual ESR reports with regulatory authorities.
If your company conducts any relevant Activities under ESR, it must file a notification within six months after the end of its financial year. The report should include details of your activities, income generated, and whether any portion of that income was taxed outside the UAE.
Businesses with multiple UAE branches only need to submit a single consolidated ESR notification. Accurate and timely filing is essential to avoid penalties and maintain full compliance with the Economic Substance Regulations in the UAE.
Certain entities are exempt from filing ESR reports. Exemptions generally apply to:
At Vista Financials, we help you determine whether your business qualifies for ESR exemptions and ensure all documentation meets UAE Ministry of Finance standards.
Under the CIGA Test, your business must perform its core income-generating activities within the UAE. This means that the key functions, decisions, and management of the activity, such as strategic planning, financial management, and production, must be carried out in the UAE. Proper documentation and evidence are essential to prove compliance during an ESR review or audit.
The Control Test ensures that your Relevant Activities are directed and managed in the UAE. Board meetings must be held locally, with a majority of directors physically present in the UAE during decision-making. Maintaining detailed records of meeting minutes, resolutions, and attendance is critical to validate control and management under UAE ESR guidelines.
The Adequacy Test requires your company to have sufficient employees, operating expenses, and physical assets in the UAE relative to the nature of your business. This means employing qualified staff, maintaining appropriate office space, and recording adequate operational expenditure locally.
We begin with a detailed analysis of your trade license, financial records, and business operations for any relevant activities.
Our experts then map your financial transactions, helping identify whether your income falls within ESR scope.
We verify whether your business satisfies the three Economic Substance Tests — Core Income Generating Activity (CIGA), Control, and Adequacy.
If your company may qualify for an ESR exemption, we will conduct a thorough eligibility review and assist in collecting supporting evidence to validate your exemption claim during MoF filing.
Within six months of your financial year-end, we file your ESR notification with the Ministry of Finance.
We coordinate with your audit team to prepare and verify audited financial statements that support your ESR filings
Within 12 months after the financial year-end, we submit your ESR report through the MoF portal.
We provide continuous ESR compliance support, tracking regulatory updates, renewal deadlines, and new MoF guidance.
Core Income Generating Activities (CIGA):
Overview:
Banks and financial institutions must show that their core banking operations and decision-making are managed from within the UAE. Vista Financials Accounting & Taxation helps ensure compliance through structured reporting and operational documentation.
CIGA:
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Entities offering leasing or financing services must prove that core financing decisions and risk management are undertaken in the UAE. We assist in evaluating transactions and preparing ESR-compliant reports.
CIGA:
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Insurance providers must conduct risk assessment, underwriting, and portfolio management from the UAE to meet ESR requirements. We support clients in demonstrating sufficient substance and operational control.
CIGA:
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Companies acting as regional or group headquarters must show that decision-making and management oversight occur in the UAE. Our consultants help document board meetings, governance records, and financial support evidence.
CIGA:
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Entities engaged in shipping operations must maintain control over their logistical and operational functions in the UAE. Vista Financials Accounting & Taxation ensures documentation meets ESR compliance standards for maritime activities.
CIGA:
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Investment managers must perform strategic financial decisions and risk evaluations from within the UAE. We assist in aligning fund structures and management activities with ESR compliance obligations.
CIGA:
For Patents or Similar Assets:
Additional Responsibilities:
High-risk IP licensees must manage strategic decisions, asset exploitation, and protection directly from the UAE.
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Businesses deriving income from intellectual property must show that R&D, brand management, and exploitation decisions occur locally. Vista Financials Accounting & Taxation helps mitigate compliance risks for IP-heavy entities.
CIGA:
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Companies distributing goods or offering services to foreign group entities must ensure their logistics, inventory, and operational functions are managed within the UAE. We help document and align these processes with ESR standards.
CIGA:
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Holding companies must maintain compliance through financial reporting, governance documentation, and UAE-based management. While their ESR requirements are less intensive, timely notification and filing remain mandatory.
Insurance
Ecommerce
Manufacturing
Oil and Gas
Real Estate
Trading
Management Consultancy
Hospitality
Holding Companies
Logistics
