UAE Corporate Tax - Free Zones

Frequently Asked Questions

Entities established in a Free Zone and satisfying the criteria to qualify for the Free Zone CT regime, known as “Qualifying Free Zone Persons,” will be subject to the following corporate tax rates:

  • 0% tax rate on Qualifying Income.
  • 9% tax rate on Taxable Income that does not meet the Qualifying Income definition.

Yes, if a Qualifying Free Zone Person fulfills the required criteria, they will automatically be eligible to avail themselves of the 0% Free Zone CT (Corporate Tax) regime. However, it’s important to note that a Qualifying Free Zone Person has the option to choose not to apply the Free Zone CT regime. Instead, they can opt to be subject to the regular CT regime and rates.

To be classified as a “Qualifying Free Zone Person,” a Free Zone entity must meet the following criteria:

  • Maintain sufficient substance within the UAE.
  • Produce “Qualifying Income” as outlined in a Cabinet Decision.
  • Adhere to transfer pricing regulations and possess the necessary transfer pricing documentation.
  • Have not elected to be subject to full corporate tax (CT) under the regular CT regime.

By satisfying these conditions, a Free Zone entity can be recognized as a Qualifying Free Zone Person and avail of the benefits associated with the Free Zone CT regime.

Yes, all Free Zone entities, regardless of their status as Qualifying Free Zone Persons, are required to register and submit a CT return.

No, there will be no differentiation in the UAE CT treatment for entities established in different Free Zones. The treatment will be the same across all Free Zone entities.

Qualifying Free Zone entities that are part of a larger multinational group are expected to face a distinct CT rate once the Pillar Two rules are integrated into the UAE CT regime.

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