Free Zone Corporate Tax Consultants in the UAE
Determine your eligibility as a Qualifying Free Zone Person (QFZP). Ensure 0% Corporate Tax compliance on Qualifying Income with expert FTA advisory.
How Corporate Tax Applies to UAE Free Zones
Direct Answer: Free Zone companies in the UAE are subject to Corporate Tax and MUST register with the FTA. However, they can benefit from a 0% Corporate Tax rate if they meet the strict conditions of a “Qualifying Free Zone Person” (QFZP) and earn “Qualifying Income.” Any non-qualifying income is subject to the standard 9% tax rate.
One of the biggest misconceptions regarding the UAE Corporate Tax Law is that Free Zone entities are automatically exempt. This is legally incorrect. To maintain the 0% tax benefit that attracts businesses to Free Zones (like DMCC, JAFZA, DAFZA, and ADGM), entities must pass a stringent set of regulatory tests. Failing to meet even one condition revokes the QFZP status for a full five years, subjecting the entire business revenue to the 9% tax rate.
Conditions to be a Qualifying Free Zone Person (QFZP)
- Adequate Substance: The company must maintain adequate substance in the UAE (e.g., adequate staff, physical assets, and operating expenditures within the Free Zone).
- Qualifying Income: The income must be derived from transactions with other Free Zone Persons or from strictly defined “Qualifying Activities” if transacting with non-Free Zone persons.
- Transfer Pricing Compliance: The entity must strictly comply with the Arm’s Length Principle and maintain valid Transfer Pricing documentation.
- Audited Financial Statements: A QFZP MUST prepare and maintain audited financial statements, regardless of its revenue size.
- De Minimis Requirements: Non-qualifying revenue must not exceed 5% of total revenue or AED 5,000,000 (whichever is lower).
Our Free Zone Corporate Tax Services
1. QFZP Eligibility Assessment
We analyze your revenue streams, categorizing them into Qualifying and Non-Qualifying income, ensuring you legally pass the De Minimis test and retain your 0% tax benefit.
2. Free Zone Tax Filing
Even at a 0% tax rate, Free Zone entities must submit an annual Corporate Tax return to the FTA. We handle the complex compliance filings and documentation submissions on your behalf. For broader support, see our Corporate Tax consulting services in Dubai.
3. Statutory Audit Services
Since audited financial statements are a mandatory condition for claiming the 0% Free Zone tax rate, our internal audit partners ensure your books are audit-ready and fully compliant with IFRS standards.