QFZP is a status, not simply a Free Zone licence
A Free Zone company does not automatically receive 0% Corporate Tax. The FTA states that a Free Zone entity must satisfy the statutory conditions to be treated as a Qualifying Free Zone Person.
The current framework requires, among other things, adequate UAE substance, Qualifying Income, transfer-pricing compliance and documentation, the applicable audited Financial Statement requirement, compliance with the de minimis condition and no election to be taxed under the standard Corporate Tax regime.
QFZP De Minimis Screening Calculator
Enter the relevant total Revenue and non-qualifying Revenue. The calculator applies the simple mathematical lower-of test. The actual tax return calculation must first apply the statutory Revenue exclusions required by the QFZP rules.
De Minimis Screening Test Passed
Non-qualifying Revenue is AED 300,000, while the simplified applicable ceiling is AED 500,000. This screening result does not by itself establish QFZP status.
This screening tool cannot determine QFZP status because de minimis is only one of the QFZP conditions.
The complete QFZP condition checklist
Qualifying Income under Cabinet Decision No. 100 of 2023
Cabinet Decision No. 100 of 2023 replaced the earlier Cabinet Decision No. 55 of 2023 and provides the current core framework for identifying Qualifying Income. It expressly allows certain income from Free Zone Persons and certain income from Non-Free Zone Persons where the relevant Qualifying Activity conditions are satisfied.
| Source of income | QFZP treatment |
|---|---|
| Transactions with Free Zone Persons | Can be Qualifying Income where the Free Zone Person is the Beneficial Recipient and the income does not arise from an Excluded Activity. |
| Transactions with Non-Free Zone Persons | Can be Qualifying Income where the income relates to a Qualifying Activity that is not an Excluded Activity and the other statutory conditions are satisfied. |
| Qualifying Intellectual Property | Subject to the specific IP nexus and calculation rules. |
| Other income | Can qualify subject to the de minimis rules and the current Cabinet / Ministerial Decisions. |
De Minimis Rule — the lower-of test
The rule is satisfied where non-qualifying Revenue does not exceed the lower of 5% of total Revenue or AED 5 million.
| Relevant Revenue | 5% amount | Lower-of 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 500,000,000 | AED 25,000,000 | AED 5,000,000 |
Revenue used in the de minimis calculation is not simply every accounting revenue line
The FTA's Free Zone Persons guide explains that Revenue for the de minimis calculation must be adjusted. Among other items, the calculation disregards Revenue attributable to a Foreign Permanent Establishment, a Domestic Permanent Establishment, specified immovable property income and certain intellectual property income.
| Revenue category | General de minimis treatment |
|---|---|
| Foreign Permanent Establishment revenue | Disregarded in the relevant de minimis calculation where attributable to the Foreign PE. |
| Domestic Permanent Establishment revenue | Disregarded from the relevant total Revenue calculation where attributable to the Domestic PE. |
| Certain Free Zone immovable-property revenue | Subject to the specific statutory exclusions and commercial-property rules. |
| Qualifying / non-qualifying business Revenue | Segregated according to the applicable Qualifying Activity, Excluded Activity, Beneficial Recipient and Non-Free Zone rules. |
The FTA provides worked examples showing why the accounting "total revenue" figure cannot simply be copied into the de minimis denominator.
Qualifying Income can include certain mainland transactions
A major misconception is that QFZP 0% applies only to customers in Free Zones. Cabinet Decision No. 100 expressly states that income from a Non-Free Zone Person can be Qualifying Income when it relates to Qualifying Activities that are not Excluded Activities and the other conditions are met.
| Scenario | Automatic result? | Correct analysis |
|---|---|---|
| Free Zone Person customer | No. | Check Beneficial Recipient and Excluded Activity requirements. |
| Mainland / Non-Free Zone customer | No. | Certain Qualifying Activities can produce Qualifying Income even when the counterparty is a Non-Free Zone Person. |
| Excluded Activity | No. | The income does not receive the QFZP 0% treatment merely because the company is in a Free Zone. |
Current QFZP compliance requirements
| Requirement | Current treatment |
|---|---|
| Adequate substance | QFZP must maintain adequate substance in the UAE Free Zone. |
| Qualifying Income | The entity must derive Qualifying Income under the current Cabinet and Ministerial Decisions. |
| Transfer pricing | Applicable arm's-length and transfer-pricing requirements and documentation must be satisfied. |
| Audited Financial Statements | QFZPs are among the categories required to prepare and maintain audited Financial Statements under the current Corporate Tax framework. |
| De minimis | Non-qualifying Revenue must remain within the lower-of 5% / AED 5 million test after the statutory adjustments. |
| Standard-rate election | A Free Zone Person can elect to be taxed under the standard Corporate Tax rules and rates, which means it does not obtain QFZP 0% treatment for the applicable period and prescribed subsequent periods. |
Losing QFZP status
If a QFZP fails a QFZP condition or elects to be taxed under the standard Corporate Tax rules and rates, it ceases to be a QFZP from the beginning of the relevant Tax Period and for the four subsequent Tax Periods. In other words, the affected period plus four subsequent periods form the five-Tax-Period consequence described in the legislation.
| Event | QFZP consequence |
|---|---|
| Condition fails in Tax Period 2026 | QFZP status ceases from the beginning of 2026 and for the four subsequent Tax Periods, subject to the applicable rules. |
| Standard-rate election | QFZP treatment ceases under the election rules for the election period and prescribed subsequent period. |
| After the cessation period | The entity may reassess QFZP eligibility under the applicable legislation. |
Small Business Relief and QFZP
2026 QFZP developments
| Current source | Why it matters |
|---|---|
| Cabinet Decision No. 100 of 2023 | Current core Qualifying Income framework; it replaced the earlier Cabinet Decision No. 55 of 2023. |
| Ministerial Decision No. 265 of 2023 | Contains the de minimis and Qualifying Intellectual Property provisions; it also repealed Ministerial Decision No. 139 of 2023. |
| Ministerial Decision No. 229 of 2025 | Current decision concerning Qualifying Activities and Excluded Activities; activity classifications should be checked against the current decision. |
| Ministerial Decision No. 84 of 2025 | Current framework for audited Financial Statements under the Corporate Tax regime. |
| FTA Decision No. 6 of 2026 | Additional procedures for QFZP compliance, issued 2 June 2026 and published 14 July 2026. |
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The QFZP 0% treatment is not a blanket Free Zone tax exemption. It depends on continuing compliance with the applicable Corporate Tax Law, Cabinet Decisions, Ministerial Decisions and FTA procedures. This page provides a screening guide, not a tax-return determination.