Confirmation of the 0% Corporate Tax Benefit (QFZP) in the UAE

No. The 0% rate is not granted automatically.

To obtain and maintain the 0% Corporate Tax benefit, a company must meet the requirements of a Qualifying Free Zone Person (QFZP) — have a real presence (office, employees, actual operations), earn qualifying income, maintain audited financial statements, and comply with the de minimis rule (no more than 5% non-qualifying income).

If these conditions are not met, the company’s income is taxed at the standard 9% rate.

Qualifying income is income earned from approved qualifying activities conducted within a Free Zone. Examples include:

• manufacturing and processing of goods;
• logistics and distribution from a Designated Zone;
• fund management, investment, and treasury services for related parties;
• trading in qualifying commodities;
• IT development, engineering, and consulting within the Free Zone.
• Income derived from such activities may be subject to a 0% rate, while income outside these categories is taxed at 9%.

Excluded activities generate non-qualifying income and are taxed at the standard 9% rate, even if performed within a Free Zone. These include:

• banking and insurance (except reinsurance and captive insurance for related companies);
• transactions with natural persons (except shipping and licensed financial services);
• ownership and leasing of property, except for commercial real estate in a Free Zone when both parties are Free Zone Persons;
• use or ownership of intellectual property that does not qualify as qualifying IP.
• Companies engaged in excluded activities must maintain separate accounting to preserve their QFZP status.

Yes. Even if the Corporate Tax rate is 0%, a Free Zone company must complete FTA registration and file an annual Corporate Tax Return.

The return must be submitted within nine months after the end of the tax period and include qualifying and non-qualifying income, expenses, and confirmation of QFZP compliance.

Failure to file the return can lead to penalties and loss of the 0% benefit.

Yes, it can.
A QFZP may earn both qualifying income (0%) and non-qualifying income (9%).
However, it must comply with the de minimis rule — non-qualifying income must not exceed 5% of total revenue or AED 5 million.
Separate accounting for each type of income is required to avoid mistakes and maintain the benefit safely.

If a company violates any of the conditions — for example, exceeds the de minimis threshold, fails to maintain audited accounts, or misses filing deadlines — it loses its QFZP status and the right to the 0% rate.

In addition, it will be subject to the standard 9% Corporate Tax rate not only for the current tax period but also for the next four consecutive years.

Regular compliance reviews and accurate reporting help avoid such risks.

Many businesses rely on consultants familiar with FTA practice and the UAE Corporate Tax Law.

Our team supports companies throughout the entire process — from registration and accounting setup to audit, reporting, and communication with the FTA — ensuring full compliance and long-term preservation of the 0% Corporate Tax benefit.