- +971501562703
- Info@czaccounting.com
Free Zone corporate tax in the UAE allows Qualifying Free Zone Persons (QFZPs) to benefit from a 0% corporate tax rate on Qualifying Income, while Non-Qualifying Income is taxed at the standard 9% rate. The CapitalZone provides specialized Free Zone Corporate Tax assessment and compliance services across Dubai and the UAE, determining your QFZP eligibility, reviewing qualifying transactions, ensuring adequate economic substance, and structuring compliance with UAE Federal Decree-Law No. 47 of 2022.
Operating within a UAE Free Zone does not automatically confer 0% tax immunity. Under UAE Federal Decree-Law No. 47 of 2022 and Cabinet Decision No. 55 of 2023, Free Zone entities must satisfy five strict cumulative conditions—maintaining adequate economic substance, deriving Qualifying Income, adhering to the arm’s length principle, preparing audited financial statements, and satisfying de minimis requirements—to retain QFZP status.
Dubai-based Free Zone specialists • QFZP eligibility assessment • Qualifying income & de minimis analysis • Audit & substance readiness
Structured QFZP Evaluation and End-to-End Compliance Deliverables
Review corporate structure, trade licence activities, commercial premises, resident employees, and operating expenses to verify adequate economic substance in the Free Zone.
Detailed categorization of customer agreements, revenue streams with Free Zone persons vs mainland UAE clients, and excluded activities under Cabinet Decision No. 55 of 2023.
Precise mathematical testing of non-qualifying income against the lower of 5% of total revenue or AED 5,000,000 threshold to prevent accidental loss of 0% tax status.
Review of transactions with domestic and international Related Parties and Connected Persons to ensure full conformity with arm’s length principles and documentation rules.
Structuring IFRS accounting records and trial balance ledgers to satisfy statutory annual audit requirements—a mandatory prerequisite for maintaining QFZP status.
End-to-end EmaraTax profile registration, corporate tax TRN acquisition, 0% tax election disclosures, and timely annual return submissions within the 9-month statutory deadline.
No. Free Zone entities are subject to UAE Corporate Tax Law but may qualify for a 0% rate on Qualifying Income only if they meet all statutory criteria to be recognized as a Qualifying Free Zone Person (QFZP). Failing any condition subjects all taxable income to the standard 9% rate.
Under UAE Corporate Tax Law, a QFZP must: (1) maintain adequate economic substance in a UAE Free Zone, (2) derive Qualifying Income, (3) not have elected to be subject to standard Corporate Tax, (4) comply with Transfer Pricing rules and documentation, and (5) prepare audited financial statements under recognized accounting standards.
The de minimis rule allows a QFZP to earn a small portion of non-qualifying revenue without losing its QFZP status. Non-qualifying revenue must not exceed 5% of total revenue or AED 5,000,000, whichever is lower. Exceeding this threshold disbars the company from QFZP status for that tax year and the subsequent four years.
Transactions with mainland UAE entities generally constitute Non-Qualifying Income, unless the activity qualifies under specific qualifying transactions (such as transactions with designated zone entities or certain regulated financial/logistics activities). Such transactions must be carefully tracked under the de minimis threshold.
Yes. Preparing audited financial statements under IFRS or IFRS for SMEs is an absolute legal prerequisite to maintain QFZP status and benefit from the 0% rate, regardless of revenue size or Free Zone authority exemptions.
Yes. All Free Zone juridical persons must register for Corporate Tax with the Federal Tax Authority (FTA), obtain a Corporate Tax TRN via EmaraTax, and submit an annual Corporate Tax return within 9 months following the close of their financial year.
If a Free Zone company fails to meet any of the QFZP conditions or exceeds the de minimis threshold, it loses its QFZP status for the entire tax period and cannot regain QFZP status for five consecutive tax years, making all net taxable income subject to 9% tax.
The CapitalZone provides diagnostic QFZP eligibility reviews, revenue categorization, transfer pricing benchmarking, IFRS-compliant accounting oversight, and end-to-end EmaraTax filing to safeguard your 0% tax benefit and ensure full FTA compliance.
Providing expert accounting, tax, and compliance services tailored to help UAE businesses grow, stay compliant, and make smarter decisions.
Don’t miss our future updates! Get Subscribed Today!
The Capital Zone Accounting & Bookkeeping is an independent private consultancy and is not affiliated with or endorsed by any UAE government authority. Government fees and approvals are subject to the respective authorities’ regulations.
©2025. The Capital Zone. All Rights Reserved.
Get reliable accounting, VAT, corporate tax, bookkeeping, and payroll support from experienced UAE professionals.
Email us at info@czaccounting.com
Whatsapp +971501562703
Landline +97143377591
Whatsapp +971501562703