In summary

After consultation with the Organization for Economic Co-operation and Development (OECD) and the European Union (EU), the UAE government issued amended Economic Substance Regulations through Cabinet Resolution No. 57 of 2020 in August 2020 (ESR or Regulations). As a result, the original Cabinet Decision No. 31 concerning ESR in the UAE, has been revoked.

Pursuant to Article 5 of ESR, the Federal Tax Authority (FTA) was appointed as the National Assessing Authority for ESR purposes and given the authority to conduct ESR audits, impose penalties and decide on appeals.

Most Licensees have gone through two rounds of filings for the Economic Substance (ES) notification and one round of filing for the ES report, till date. The FTA has also started issuing administrative penalties for various default(s) by Licensees.

In relation to the penalties imposed and in order to exercise its responsibility of deciding appeals, the FTA recently issued a user guide (the Guide) to provide details of ESR-related appeal procedures and address related issues. The guide provides details on the following aspects:

  • Grounds for filing an appeal;
  • Process of filing an appeal;
  • Manner of dealing with ESR-related technical issues (e.g. ES notification not appearing on dashboard), duplicate submissions, amendments of ES notification and ES report; and
  • Timelines for submission of appeal to the FTA, subsequent decision by the FTA and payment of penalties.


The Guide clarifies that the FTA would not be providing any advice in relation to the scope and application of the Regulations, and the Licensee should obtain professional advice in this regard.


A.     Appeal procedure and timelines

  • The Guide is a user-friendly manual designed for all Licensees who would like to submit an appeal to the FTA against the ESR-related administrative penalties imposed on them.
  • A Licensee may submit an appeal against the penalty levied on it on any of the following grounds:
    • The Licensee did not commit the violation attributed to it;
    • The administrative penalty imposed is not proportionate to the violation;
    • The administrative penalty imposed exceeds the limited prescribed hereunder.
  • The Licensee must submit an appeal request through its ESR account on the portal of Ministry of Finance (MoF).
  • The MoF portal dashboard will indicate if a penalty has been issued, and if so, will have an option to file an appeal. The portal will show timelines for submitting an appeal and payment of penalty(ies).
  • The Guide provides the steps to be followed for filing an appeal and also provides the following timelines:




Submission of appeal

Forty (40) working days from the date of levy of penalty

Submission of additional documentation requested by the FTA

Five (5) working days from the date of request

Issue of appeal decision by the FTA

Forty (40) working days from the date of submission of appeal or additional documents, whichever is later

Inform Licensee of the decision

Five (5) working days from the date of issuance of the decision

Payment of penalty

Forty (40) working days from the date of levy of penalty. The calculation of the final deadline for paying the penalty is stopped upon submitting the appeal request, and it will be resumed if the appeal request is rejected or withdrawn


B.     ESR support channels


The Guide provides the following contacts for any ESR-related issues:



  • Issues related to an entity’s registration on the MoF portal
  • Issues in logging into an ESR account or on the ESR portal

MoF call center


Technical issues related to the ESR portal (for example, notification not appearing on the Licensee dashboard, problems with submitting requests)

  • Amendment of Economic substance notification or report
  • Cancellation of duplicate requests/filings

Respective regulatory authorities[1]

Inquiries about ESR appeals (including follow up requests) or any other ESR-related aspects (This excludes advice on ESR applicability or classification)

The Guide provides important details on the prerequisites and procedure of filing an appeal against any penalty notice issued by the FTA and should be helpful to Licensees.


[1]  Contact points of respective regulatory authorities can be found under section “M. Contact Points for Inquiries of Real Economic Activities” on the Economic Substance Regulations page on the Ministry of Finance website (

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