Current QFZP legal framework
The UAE Corporate Tax framework is established by Federal Decree-Law No. 47 of 2022. The current QFZP Qualifying Income framework is principally based on Cabinet Decision No. 100 of 2023, together with the Ministerial Decisions defining current Qualifying Activities, Excluded Activities and related calculations.
The current FTA legislation database also contains Ministerial Decision No. 229 of 2025 on Qualifying Activities and Excluded Activities and Ministerial Decision No. 84 of 2025 concerning audited Financial Statements for Corporate Tax purposes.
In addition, FTA Decision No. 6 of 2026 was issued on 2 June 2026 and published on 14 July 2026 to establish additional procedures for QFZP compliance.
Understand the QFZP categories
Qualifying Income
| Applicable rate | 0% Corporate Tax |
| Income / activity | Income that falls within the current Qualifying Income rules, including income from specified Qualifying Activities with Free Zone and Non-Free Zone persons where the statutory conditions are satisfied and the activity is not an Excluded Activity. |
| Compliance | QFZP conditions must be satisfied, including adequate substance in the UAE Free Zone, Qualifying Income, arm’s-length compliance, required transfer-pricing records, audited Financial Statements where required, and the de minimis condition. |
International Money Transfer & FX Rates — Transparent Cross-Border Wire Rates
Bypass retail bank markups when transferring USD, GBP, EUR, CAD, AUD, or INR. Check today's real mid-market exchange rate instantly before initiating a transfer.
Qualifying Income: mainland transactions are not automatically excluded
A transaction with a UAE mainland or other Non-Free Zone Person is not automatically non-qualifying.
Cabinet Decision No. 100 of 2023 provides that Qualifying Income can include income derived from transactions with a Non-Free Zone Person where the income relates to a Qualifying Activity that is not an Excluded Activity and the statutory conditions are satisfied.
| Transaction | Automatic result? | Correct approach |
|---|---|---|
| Sale to another Free Zone Person | No automatic 0%. | Check the Beneficial Recipient condition and whether the activity is qualifying and not excluded. |
| Sale to UAE mainland / Non-Free Zone customer | Not automatically 9%. | Income from a Non-Free Zone Person can qualify where the current Qualifying Activity rules permit it and the other conditions are satisfied. |
| Excluded Activity | Not QFZP 0%. | Check the current Excluded Activities list and applicable Corporate Tax treatment. |
| Immovable property | Special rules apply. | Analyse the property type, location, customer status and whether the income falls within the specific QFZP provisions. |
QFZP conditions
What does NOT create QFZP status by itself?
De Minimis Rule — 5% or AED 5 million, whichever is lower
A QFZP satisfies the de minimis condition where its non-qualifying Revenue does not exceed 5% of total Revenue or AED 5 million, whichever is lower.
| Total Revenue | 5% of Revenue | Applicable ceiling |
|---|---|---|
| AED 2,000,000 | AED 100,000 | AED 100,000 |
| AED 10,000,000 | AED 500,000 | AED 500,000 |
| AED 100,000,000 | AED 5,000,000 | AED 5,000,000 |
| AED 200,000,000 | AED 10,000,000 | AED 5,000,000 |
What happens when the de minimis condition is breached?
A failure to satisfy a QFZP condition can cause the person to cease being a QFZP for the relevant Tax Period and subsequent Tax Periods as prescribed by the Corporate Tax legislation.
| Scenario | Consequence |
|---|---|
| De minimis condition satisfied | QFZP condition can continue to be satisfied, assuming all other requirements are also met. |
| De minimis condition exceeded | QFZP status can be lost under the statutory cessation rules. |
| QFZP status lost | The entity can become subject to the standard Corporate Tax regime at 9% on its Taxable Income, subject to the applicable cessation and transitional provisions. |
Qualifying Activities and Excluded Activities
The activity list is defined by current legislation, including Ministerial Decision No. 229 of 2025 on Qualifying Activities and Excluded Activities.
| Activity area | Current treatment |
|---|---|
| Manufacturing | Can fall within the qualifying-activity framework subject to the current Ministerial Decision and all QFZP conditions. |
| Qualifying distribution | Subject to the current statutory definition and the specific distribution conditions, including applicable Designated Zone rules. |
| Holding investments | Certain holding of shares and securities for investment purposes can be a Qualifying Activity, subject to the current rules. |
| Headquarters / related services | Certain headquarters and related-party services can qualify where they satisfy the applicable statutory definition. |
| Logistics | Certain logistics services can be qualifying activities, but the precise current definition must be checked. |
| Fund / investment management | Specific financial and investment-management activities can qualify subject to the current regulatory definitions and conditions. |
| Excluded activities | Income from Excluded Activities does not receive 0% merely because the company is a Free Zone Person. |
Transfer pricing and financial statements
| Requirement | Current position |
|---|---|
| Arm’s-length principle | QFZPs must comply with arm’s-length requirements for relevant related-party and permanent-establishment arrangements. |
| Transfer Pricing documentation | Required where the Corporate Tax rules require it. Satisfying the QFZP condition should not be described merely as a generic "keep TP documents" statement without considering the applicable thresholds and documentation rules. |
| Financial Statements | QFZP rules include audited Financial Statement requirements, while Ministerial Decision No. 84 of 2025 contains current rules concerning audited Financial Statements for Corporate Tax purposes more broadly. |
| Audit | The exact audit obligation should be checked against the current statutory category, the QFZP requirements and the current Financial Statement decision. |
2026 QFZP compliance update
FTA Decision No. 6 of 2026 is now part of the current compliance framework. The FTA's official legislation database states that the decision was issued on 2 June 2026 and published on 14 July 2026.
| 2026 source | Significance |
|---|---|
| FTA Decision No. 6 of 2026 | Determines additional procedures for QFZP compliance. |
| Ministerial Decision No. 229 of 2025 | Current decision concerning Qualifying Activities and Excluded Activities. |
| Ministerial Decision No. 84 of 2025 | Current decision concerning audited Financial Statements for Corporate Tax purposes. |
| Cabinet Decision No. 100 of 2023 | Core Cabinet framework identifying Qualifying Income for QFZPs. |
Frequently Asked Questions
Official primary sources
The 0% QFZP treatment should not be presented as a permanent Free Zone tax exemption. The entity must continue to satisfy the applicable Corporate Tax conditions and the current Qualifying Income, Qualifying Activity, Excluded Activity, substance, transfer-pricing, financial-statement and de minimis requirements.