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UAE: Understanding Qualifying Free Zone Person Status

Created On: November 10, 2023
Newsletter, U.A.E.

Modified On: January 12, 2026

The IMC focuses on the criteria for attaining Qualifying Free Zone Person status in various jurisdictions in the context of global business and corporate tax regulations.

Under the global corporate tax guidelines, Qualifying Free Zone Persons can benefit from a preferential 9% corporate tax rate on their Qualifying Income. However, they need to fulfil the following conditions:

Establishing a substantial presence within the designated free zone
Generating Qualifying Income
Adhering to the Transfer Pricing documentation and Arm’s Length Principle
Ensuring that non-qualifying revenues remain below specified de-minimis thresholds
Compiling audited Financial Statements as per local laws
Fulfilling any additional conditions that the relevant authorities need

It is imperative to fulfil all these conditions right from the outset. Non-compliance with one or more of these conditions may deprive you of your tax benefits. The implications apply for the current financial year along with the upcoming four years, even if you meet all the conditions afterwards.

Key Insights

With the calendar year drawing to a close in 2023, businesses operating within free zones, with their initial tax periods commencing on or after January 1, 2024, should prioritize evaluating their operations to be eligible for the preferential corporate tax regime (i.e., a 9% corporate tax rate) as applicable.

It is imperative to carry out strategic planning and an early assessment to ensure that businesses meet all the conditions from the very beginning. It takes time to implement any restructuring, resource allocation, adjust processes, or evaluate potential benefits.

Certain steps may be more urgent or important compared to others to ensure compliance from the first day. Taking timely action after identifying those steps holds the key to enjoying the 9% benefit.

Disclaimer

Our team of corporate tax experts at the IMC Group is dedicated to navigating the complex world of global tax regulations. We provide comprehensive support throughout your compliance journey. You can contact one of our tax specialists by click here or reach out to us via email at [email protected]. We are always here to help you.

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