The UAE abolished the economic substance notification and report filings for financial years ending after 31 December 2022, so in 2026 most businesses file nothing — but the underlying obligation to be able to prove substance is still legally alive, and any company that missed a pre-abolition filing still carries that exposure.
What was abolished, and when
Cabinet Decision No. 98 of 2024 repealed Cabinet Decision No. 57 of 2020, the regulation that required Relevant Activities licensees to file an annual ESR Notification and an ESR Report with the National Assessment Authority. The repeal applies to financial years ending after 31 December 2022: no ESR filing is due for FY2023 onward (Cabinet Decision 98 of 2024, uaelegislation.gov.ae). In practice that means the 2025 and 2026 calendar-year filers file nothing.
What still applies in 2026
Three things have not disappeared:
- Historical exposure. If a company failed to file its ESR Notification or Report for a period before the repeal, the obligation and the penalty exposure for that period were not retroactively erased. Late or missing pre-2023 filings can still surface in due-diligence, audits or investor checks.
- Underlying substance expectation. Cabinet Decision 57 of 2020's substance expectations (management in the UAE, adequate qualified staff, expenditure for Relevant Activities) remain what regulators, banks and treaty partners look at. The filing form is gone; the substance test is not.
- Record retention. Federal Decree-Law No. 32 of 2021 (Commercial Companies Law) still requires companies to keep accounting records for at least five years, and Corporate Tax law extends retention to seven years after the end of the tax period — so keep every pre-2023 ESR filing you ever made.
Who must still act, and how
| Your situation | What to do in 2026 | Source |
|---|---|---|
| FY ended on or before 31 Dec 2022, filed | Nothing to file. Retain the submitted Notification, Report and evidence for at least five years. | CCL Art. 27; CT record rules |
| FY ended on or before 31 Dec 2022, never filed | Do not file the abolished form. Document the position, check for penalty notices and take advice on voluntary remediation. | Cabinet Decision 98 of 2024 |
| FY2023–FY2026 | No ESR Notification or Report is due. Consider Corporate Tax substance questions instead. | Cabinet Decision 98 of 2024 |
| Merging, winding up or selling | Buyers' lawyers will request historical ESR filings — ensure they exist and are retrievable. | CCL Art. 27 (records); Cabinet Decision 98 of 2024 |
The decision, in one line
If your financial years ended on or before 31 December 2022, treat your old ESR filings as a records job: store them, retrieve them, and file nothing new. If your years end after that date, ESR is simply over — but Corporate Tax substance (managed and controlled in the UAE, adequate staff and expenditure) is now the test that matters.
FAQ
Do I still need to file an ESR notification in 2026? No. Cabinet Decision No. 98 of 2024 repealed the ESR filing requirement for financial years ending after 31 December 2022, so there is nothing to file for 2023, 2024, 2025 or 2026.
Does that mean economic substance no longer matters? No. The substance expectation still shapes what banks, auditors and treaty partners accept, and pre-2023 filings are part of a company's permanent compliance history.
What if I never filed for a year before 2023? The penalty exposure for that period was not erased by the repeal. Document the gap and take advice before any due-diligence event.
Finanshels supports UAE companies with corporate tax registration and audit and assurance — the substance record that replaced the ESR paper trail.
