Free zone companies in the UAE can access a 0% Corporate Tax rate on qualifying income — but only as Qualifying Free Zone Persons (QFZPs). Here's exactly what that means in 2026.
QFZP conditions
- Maintain adequate substance in the UAE free zone
- Derive qualifying income (per Ministerial Decisions 139/2023 and 265/2023)
- Comply with arm's-length transfer pricing
- Prepare audited financial statements
- Meet the de minimis non-qualifying revenue test (lower of AED 5m or 5% of total revenue)
Qualifying income examples
- Transactions with other free zone persons (excluding excluded activities)
- Qualifying activities listed by the Ministry of Finance
- Ownership and exploitation of qualifying intellectual property
If you fail QFZP
Failing any condition disqualifies you for the current tax period and the next 4 tax periods — taxed at 9% on all taxable income above AED 375,000.
QFZP is annual and binary. Plan substance, contracts and revenue mix before year-end.
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Frequently asked questions
Quick answers to common UAE corporate tax questions.
This article is for general guidance only and reflects FTA rules as of June 2026. Always confirm your specific position with a qualified UAE tax advisor.