Cabinet Decision No. 55 of 2023 & Ministerial Decision 139/2023
UAE Corporate Tax & Freezone QFZP Guide
Detailed legal analysis of Federal Decree-Law No. 47 of 2022 — Qualifying Free Zone Person (QFZP) 0% corporate tax rules, qualifying income vs mainland revenue, De Minimis limits, and Transfer Pricing compliance.
Freezone Tax Incentive Framework
The UAE honors its tax commitments to freezone companies while aligning with OECD International Tax Standards under **Cabinet Decision No. 55 of 2023**.
Freezone entities that fulfill QFZP criteria enjoy **0% Corporate Tax** on Qualifying Income.
Qualifying Free Zone Person (QFZP) - 0% Tax Rate
| Regulatory Aspect | Requirement & Standard |
|---|---|
| Applicable Tax Rate | 0% Corporate Tax on Qualifying Income |
| Eligible Income Streams / Activities | Transactions with other Free Zone persons, manufacturing, processing of goods, holding shares, logistics, ship management, headquarter services, fund management |
| Mandatory Compliance Prerequisites | Maintain adequate substance in freezone, derive Qualifying Income, comply with Transfer Pricing (Arm's Length), & prepare audited financial statements |
The De Minimis Rule (5% / AED 5M)
- 📏 Threshold Limit: Non-qualifying revenue must not exceed 5% of total revenue OR AED 5,000,000 (whichever is lower)
- 📏 Consequence of Breach: If non-qualifying revenue exceeds De Minimis limit, QFZP status is LOST for 5 tax years
- 📏 Result of Breach: Entire net taxable profit is taxed at 9% for 5 consecutive years
QFZP Mandatory Checklist
- ✅ Adequate Economic Substance: Maintain adequate core income-generating activities (CIGA) in freezone
- ✅ Arm's Length Principle: Maintain Transfer Pricing documentation for related party transactions
- ✅ Audited Financial Statements: Prepare audited accounts by a licensed UAE auditor
- ✅ Elect QFZP Status on EmaraTax portal
Frequently Asked Questions
Freezone companies classified as Qualifying Free Zone Persons (QFZP) enjoy 0% Corporate Tax on Qualifying Income under Cabinet Decision 55/2023.
Non-qualifying revenue must not exceed 5% of total revenue or AED 5 Million (whichever is lower).
Yes. To maintain 0% QFZP tax status, freezone entities must prepare and maintain audited financial statements.
FTA Official Portal
• FTA Corporate Tax Freezone Guide: tax.gov.ae