CIGA by Activity: What Must Be Performed in the UAE

Most businesses understand that economic substance in the UAE is something they need to think about. Far fewer understand what that actually means in practice. The gap between knowing you need substance and knowing exactly which activities must physically happen here is where companies get into trouble.

That gap has a name: CIGA. Core Income Generating Activities. They are the specific actions that the law says must be performed in the UAE for your business to pass the full economic substance test. Get them wrong and no amount of office space or UAE-resident directors will save you.

Here is a plain account of what CIGA means, how it works across all nine relevant activity categories, and why it now matters even more under the corporate tax regime than it ever did under the old ESR filing regime.

What CIGAs Are and Why They Are the Core of the Test

The economic substance test has three parts: your entity must be directed and managed in the UAE, it must have adequate employees and assets here, and it must perform its CIGAs here. The third limb is the hardest to satisfy and the most consequential to fail.

CIGAs are the activities that actually generate your income. Not the support functions. Not the admin. The substantive, value-creating work that explains why a customer or counterparty pays you. The test asks: is that work happening in the UAE, or is it happening somewhere else while you maintain a UAE address for convenience?

Regulators have always been clear about this. They are not interested in legal form. They want to see economic substance over form, meaning the actual performance of income-generating work in the jurisdiction.

The Principle: CIGAs Must Be Performed in the UAE

The requirement is straightforward: CIGAs must be conducted in the UAE by qualified personnel who are physically present here. This means the people doing the real work, whether employed directly by the entity or through an outsourcing arrangement, need to be operating from UAE soil.

There is no shortcut. You cannot direct CIGAs from abroad and claim they were performed in the UAE. Decision-making that takes place outside the UAE does not count. The directed and managed requirement reinforces this: strategic decisions about the relevant activity must also be made here, typically in board meetings held in the UAE with a quorum of directors physically present.

Each relevant activity has its own CIGA list. What counts as a CIGA for a shipping company is completely different from what counts for an IP business. The regulations are specific, and you need to check your actual activity, not just the category on your trade licence.

CIGA Breakdown by Relevant Activity

Below is a reference summary across all nine relevant activities. Each entry captures the activities the regulations have identified as core to generating income from that business.

A few things to note about this table. First, holding companies sit in a special position. A pure holding structure that only owns shares and earns dividends has lighter requirements. But the moment an entity holds other asset types or earns other income, it is treated as a full-substance business. Second, the banking, insurance, investment fund management, and lease-finance categories all overlap to some degree with headquarters activities. The regulations prevent double-reporting: if you conduct one of those four activities, you do not separately need to demonstrate headquarters substance for the same income.

The Outsourcing Rule

A business does not have to perform CIGAs using its own employees. Outsourcing is permitted. But the rules governing it are strict, and misunderstanding them is one of the more common compliance failures we see.

To outsource CIGAs validly, you need three things in place. First, the outsourcing provider must be in the UAE. The employees and assets used to perform the CIGAs must be physically present here. Routing CIGAs through an overseas service provider and billing back to a UAE entity does not satisfy the test. Second, the licensee must genuinely supervise the outsourced work. The FTA looks for documented evidence of oversight: contractual arrangements that specify how supervision will be conducted, and actual conduct that confirms it happened. Third, the same resource cannot be counted twice. If an employee at an outsourcing provider performs CIGAs for two different licensees simultaneously, neither entity can claim that hour of work.

The documentation requirement is worth taking seriously. Board minutes, correspondence with the service provider, oversight reports and signed-off deliverables all form part of the audit trail. Without these, outsourced CIGAs can look, to an assessor, like CIGAs that were never performed in the UAE at all.

How the CIGA Test Connects to the QFZP Substance Test

The ESR, as a filing regime, was discontinued for financial years ending after 31 December 2022 under Cabinet Decision 98 of 2024. Fines for non-compliance after that date were cancelled, and overpaid penalties are being refunded. For the period from January 2019 to December 2022, compliance requirements remain, and the FTA has signalled increased audit activity for that window.

But here is the thing. The substantive question of whether CIGAs are performed in the UAE did not go away when the ESR filing requirement ended. It shifted.

Free zone businesses seeking to qualify for the 0% corporate tax rate as Qualifying Free Zone Persons (QFZPs) must still satisfy an adequate substance test under the corporate tax framework. That test requires CIGAs to be conducted within the free zone, supported by adequate employees, assets, and operating expenditure in proportion to the business. For more on how CIGA applies under the QFZP regime, the stakes are high: failing the QFZP substance test means losing the 0% rate on all income, not just qualifying income, for the current year and the following four years.

The FTA released updated guidance on free zone persons in May 2024, and new Ministerial Decisions 229 and 230 of 2025 have further refined the rules, requiring all QFZPs to maintain audited accounts regardless of revenue size. The message is consistent: substance is not a box-ticking exercise. The regulator wants to see genuine activity performed by real people doing real work.

How a Fractional Executive Ensures CIGA Is Performed and Documented

The CIGA test is not merely a legal question. It is an operational one. Someone has to actually perform the relevant activities in the UAE, and someone has to make sure the documentation exists to prove it.

That is where a fractional executive with ESR and corporate tax expertise earns its keep. Most companies going through this have a capable team, but they do not necessarily have anyone with the specific knowledge to map their activities to the CIGA definitions, identify which activities are genuinely performed here versus what is merely directed from overseas, and build the oversight and documentation infrastructure the FTA expects to see.

The fractional model is useful precisely because this does not need to be a full-time hire. What it does need to be is someone who has done it before, knows where the failures typically happen, and can structure the internal processes to make compliance durable rather than a one-off exercise ahead of a filing deadline.

If you want to understand how ensuring CIGA is performed and documented in the UAE works in practice, the starting point is always a mapping exercise: matching your actual activities against the statutory CIGA list for your relevant activity, and then assessing where gaps exist. For the consequences of getting this wrong, see our detailed review of penalties for failing the CIGA test.

A useful first step is to assess your CIGA position using our economic substance readiness tool, which walks through the key questions by relevant activity type.

Ready to Clarify Your CIGA Position?

CIGA compliance is not complicated in principle. What makes it hard is the translation from statutory language to operational reality, and then the discipline to maintain documentation over time.

We work with UAE businesses to map their relevant activities, structure their outsourcing arrangements properly, and build the oversight processes that hold up under FTA scrutiny. Our ESR Qualified Executive service exists specifically for this purpose.

If you are unsure whether your CIGAs are genuinely being performed in the UAE, or whether your documentation would survive an audit, get in touch with the Fractional Dubai team. A clear-headed assessment now is considerably cheaper than the alternative.

FAQs

What happens if a company cannot demonstrate its CIGAs were performed in the UAE?
For the ESR period (2019 to 2022), failing the CIGA test can result in penalties ranging from AED 50,000 to AED 300,000 and potential referral to foreign tax authorities. For free zone businesses under the corporate tax regime, failure to meet the CIGA substance requirement means losing QFZP status and paying 9% corporate tax on all income for five years.

Can CIGAs be performed by a related party rather than directly by the entity?
Yes, outsourcing CIGAs to a related party or third party is permitted. The provider must be UAE-based, and the licensee must demonstrate genuine supervision of the outsourced work through documented oversight arrangements. The same employee cannot be counted as performing CIGAs for more than one entity simultaneously.

Is the CIGA test the same for all nine relevant activities?
No. Each relevant activity has its own defined list of CIGAs. The activities that count as CIGA for a shipping company are entirely different from those for an investment fund manager or an IP business. Entities need to assess their CIGA obligations against the specific list for their activity, not against a generic substance standard.

Does the ESR filing cancellation mean substance requirements no longer apply?
No. Cabinet Decision 98 of 2024 cancelled the ESR notification and reporting requirement for financial years ending after 31 December 2022. It did not remove the substance concept itself. Free zone companies pursuing QFZP status under corporate tax must still satisfy a CIGA-based substance test to qualify for the 0% tax rate.

How much documentation is needed to evidence CIGA performance?
The FTA expects to see records that demonstrate CIGAs were genuinely performed in the UAE. This typically includes employment contracts, activity logs, board minutes, oversight reports for outsourced arrangements, and any contracts with service providers. Records should be retained for a minimum of five years.