The Laws Concerning Economic Substance in the UAE

Economic Substance

TAppeal Guidance for Economic Substance Regulations

Whenever an ESR Notification or an Economic Substance Regulations Report is submitted, it does so through the portal of the Ministry of Finance. On the website of the Ministry of Finance, both Licensed Businesses and Exempted Businesses already have accounts in their names. They are required to log in to their accounts before submitting their ESR appeals in order for us to process it.

An individual ESR appeal needs to be submitted for each Economic Substance Regulations penalty that was assessed.


The Appeal Guide for Economic Substance Regulations states that the deadline for submitting the ESR Appeal and paying the ESR Penalty is forty working days beginning on the date that the ESR penalty was imposed. This deadline applies to both the submission of the ESR Appeal and the payment of the ESR Penalty.

The countdown clock for the ESR Penalty restarts as soon as the ESR Appeal is submitted, and it will remain at that pace until the ESR appeal is either dismissed or withdrawn entirely. After the ESR appeal has been fully accepted, the deadline for submitting the ESR appeal and the ESR penalty payment will no longer be in effect.

The decision regarding the ESR Appeal that is submitted is made by the Federal Tax Authority within 40 working days, and eventually, the Licensee and Exempted Licensee are notified about their decision within 5 working days beginning with the day on which the decision was given.

Documentation in Support of the Application to be Submitted

According to the new Economic Substance Requirements, it is the responsibility of the Federal Tax Authority, in collaboration with the Regulatory Authorities, to request any additional information, documents, or data that may be required by the Economic Substance Regulations. This responsibility was given to the Federal Tax Authority.

If the Licensee and the Exempted Licensee do not provide the requested documentation. Within five working days beginning with the day that the request was made. The ESR Appeal will be cancelled and the Licensee and Exempted Licensee will be held responsible.

After the first submission of the supporting documents, the Federal Tax Authority will extend. The time for the re-evaluation to a total of forty additional working days. Notification is provided to the Appellant Licensee and the Appellant Exempted Licensee. Who submitted the ESR Appeal within five business days, beginning with the day on which the decision was rendered.

ESR Penalties in UAE

Following that, the ESR Penalties will be charged by the Federal Tax Authority, and they are as follows:

  • ESR Penalties in the amount of AED 20,000 will be impose on. The entity if it is unable to file its ESR
  • Notification within six months of the end of the fiscal year.
  • If you are unable to file your ESR report within 12 months after the end of the fiscal year. You will be subject to.
  • ESR penalties in the amount of AED 50,000.
  • ESR Penalties will be charged at a total amount of AED 50,000 if the Economic Substance Requirements cannot be met.
  • During the subsequent fiscal year, if you repeatedly executed one of the two offences that were indicated by the
  • National Assessment Authority, you will be subject to ESR Penalties in the amount of 400,000 AED. In the event that the applicant committed an act of dishonesty that prevented the Federal Tax Authority from levying the listed ESR penalties within the specified time frame, the statute of limitations for imposing those penalties is extended to a period of six years beginning with the date on which the violation was committed.
  • In the event that false information is provided, the ESR may levy a penalty of 50,000 AED.
  • Further ESR Sanctions, including the suspension, revocation, or refusal to reinstate the Licensee’s or Exempted
  • Licensee’s commercial licence, are also subject to appeal.