The UAE introduced economic substance regulations in 2019 to comply with EU requirements and ensure that UAE entities do not artificially attract profits. The regulations apply to companies engaged in relevant activities like banking, insurance, and intellectual property. To meet the economic substance test, affected companies must conduct core income-generating activities and adequate employment and expenditures in the UAE. Noncompliance can result in fines, though exemptions exist for government-owned entities and those not engaged in relevant activities or earning income in a given period.