Expand your corporate world!

Knowledge base

How UAE companies can establish substance: the CIGA (core income generating activity) test

August 2, 2019

The UAE has recently released the Cabinet of Ministers Resolution n. 31/2019, and a new way for UAE-based companies to establish substance can do so by using this option.

Companies based in the United Arab Emirates who are performing any of the specified relevant activities for the purpose of the ES regulations would require to prove that the relevant CIGA’s have been undertaken in the UAE. The pre-conditions for the CIGA Test differ depending on the company’s individual activity.

A list of common company activities that fall within the scope as per UAE legislation are listed below, and what core income generating activities that are fully accepted. The UAE ES regulations permit that CIGAs can be delegated to a corporate service provider located in the UAE, however that’s subject to thorough supervision by the business or entity. Though, the economic substance of the service providers would not be counted multiple times by various entities when indicating their own substance in the UAE.

Pure Holding Companies who completely earn dividends and capital gains income are put under lighter economic substance scrutiny and thus a reduced test is applied to check:

(i) Their compliance regarding the submission of documents, various records and information to the applicable UAE Regulatory Authority.

(ii) If they have the required number of employees and if they have premises for holding and conducting the business.

In case the Holding Company is earning extra relevant activity income other than dividends and capital gains; for example management fees or service charges etc, then the standard three-level ES Test would have to be taken for any additional activities carried out.

Please note that the regulation does not add any substance threshold, so if the guidance gets some additional clarity on this, any extra income earned by the holding company would have to necessarily meet the ES regulations.


Holding Companies

All business-related activities deriving income from dividends or capital gains received from equity interest.


  • Managing risks.
  • Raising funds.
  • Taking hedge positions.
  • Offering loans credit or other financial services to clients.
  • Managing client capital and preparing investor reports.


  • Forecasting and calculating risks.
  • Insuring or re-insuring against risk.
  • Offering insurance services to clients.
  • Underwriting insurance and performing re-insurance.

Fund Management

  • Decision making on holding or selling the investments.
  • Calculating risks and managing reserves.
  • Deciding on currency.
  • Interest fluctuations.
  • Hedging positions.
  • Preparing investor reports.

Lease Finance

  • Deciding funding terms.
  • Finding & acquiring assets to be leased.
  • Deciding the financing terms and duration of leases.
  • Monitoring & updating or revising agreements & managing risks.


  • Overhauling.
  • Maintaining ships & managing the crew.
  • Tracking shipping.
  • Logistics & planning for trips & voyages.

It is important to note that for the purpose of the ES regulations, the applicable activities of Distribution and Service Centre and Intellectual Property related transactions are only included in legitimate CIGA Activities with international companies and entities only. Therefore, regular commercial business for any such activities carried out with non-related entities will not be covered by the new regulations.

Learn how to solve problems in your business today

Join the club

Every week, we'll be sending you curated materials handpicked tips about international business, law, taxes, accounting and compliance.

Plus, you'll be the first to know about our discounts!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.