To maintain QFZP treatment, a free-zone company needs to meet the status conditions and support its income classification for each tax period. Establish the substance, accounting, audit, transfer-pricing and return process before relying on 0% tax. Monitor changes in customers, activities and operating locations during the year. This treatment is a conditional corporate-tax rate for Qualifying Income, not an entity-wide exemption from registration, filing, VAT or other obligations. (U1, U4, U5, U7)
Who this applies to: Owners and finance teams implementing an ongoing compliance process after assessing QFZP eligibility.
One-sentence conclusion: Maintain QFZP treatment through supported activity and timely compliance, not through a one-time licence application.
What should the initial assessment establish?
Confirm the entity and zone status, tax period, actual activities, income streams and expected customers. Identify any PE, property, IP or related-party income. Review whether an ordinary-regime election has been made.
Use QFZP eligibility conditions for the entity test. Use qualifying-income classification for the receipts. Keep this page as the implementation plan.
What records and recurring work are needed?
| Workstream | Required evidence or action | When to review |
|---|---|---|
| Tax registration | Entity details, period and registration status | At establishment and relevant changes |
| Substance | Core activity, staff, assets, expenditure and outsourcing supervision | During the period and after operating changes |
| Income classification | Contracts, customer status, ledger categories and special income calculations | Before new revenue and at each close |
| De minimis | Prescribed revenue categories and threshold calculation | During the period and at year-end |
| Transfer pricing | Related-party terms, service evidence and applicable documentation | Before transactions and at close |
| Accounts and audit | Reconciled accounts and required audited statements | In time for return preparation |
| Return and payment | Approved calculation, return and submission evidence | By the applicable deadline |
Set the review frequency around the business. A stable holding entity and a growing distributor do not need the same transaction-monitoring process.
How should you monitor substance?
Keep evidence of who performs the core activities and where. Record premises, qualified people, expenditure and genuine management. When outsourcing is permitted, retain agreements and evidence of supervision.
Reassess before moving staff, outsourcing activity or adding a location. Legacy ESR reports are not the current QFZP compliance process. ESR removal did not remove corporate-tax substance requirements. (U4, U6)
How should you monitor the de minimis limit?
Classify the revenue under Cabinet Decision 100 of 2023 and Ministerial Decision 229 of 2025. The threshold is the lower of 5% of total revenue or AED 5 million, using the prescribed calculation.
Build the monitoring report from those categories. Do not count every special PE, property or IP receipt as ordinary non-qualifying revenue. Forecast new revenue before the company enters the contract. (U4, U5)
The forecast does not replace the final tax-period calculation. Reconcile it to the accounts before filing.
Does a small company need an audit?
A QFZP requires audited financial statements under the applicable decision regardless of turnover. Arrange the audit early enough to resolve classifications and supporting evidence. The absence of an audit requirement from a licence package does not waive the corporate-tax requirement. (U7)
Ministerial Decision 84 of 2025 applies to tax periods commencing on or after 1 January 2025. Earlier periods require the decision applicable to those periods. Do not apply a guide’s publication date as the legal commencement date.
What transfer-pricing work is necessary?
Apply the arm’s-length principle to related-party dealings and the relevant connected-person rules. Document the actual services, rights, funding and prices.
Check whether master-file and local-file thresholds apply. Even below those thresholds, the business still needs support for its pricing and disclosures. A company cannot replace evidence with an unsupported management-fee percentage. (U8)
When are the return and tax due?
The normal corporate-tax return and payment deadline is nine months after the tax period ends, subject to the applicable provisions and any valid extension.
For an illustrative period ending 31 December 2026, the normal nine-month deadline is 30 September 2027. A company with a different year-end has a different deadline. Registration deadlines have separate rules. (U1, Articles 48 and 53)
What changes require review before implementation?
Disqualifying-scenarios box: A breached status condition can remove QFZP treatment for the period and the next four periods. Review new non-qualifying activity, material revenue changes, inadequate substance, missing audited statements and an ordinary-regime election before proceeding. (U1, U5)
A domestic or foreign PE can change the income analysis without making every receipt identical. Opening a mainland branch or taking an operating permit needs separate licensing and tax assessments.
How do you prepare for filing?
- Reconcile the revenue and expense ledgers.
- Confirm customer and activity classifications.
- Complete special income and de minimis calculations.
- Review related-party transactions and disclosures.
- Obtain the required audited financial statements.
- Approve the tax computation and return.
- Submit the return and any payment on time.
- Retain the records and submission evidence.
Corporate-tax records generally require retention for seven years after the relevant tax period. Other laws or disputes can require longer retention. (U1, Article 56)
Questions owners ask
Does zero tax payable mean no return?
No. Preferential treatment does not remove the applicable registration and return obligations.
Can we elect ordinary taxation to simplify the position?
An election needs a period-specific assessment. Review the legal effect and the commercial consequences before making it.
Must every free-zone business file old ESR reports?
No. Distinguish historical ESR obligations from current corporate-tax substance and compliance. (U6)
Discuss your company compliance needs
Tell us your activities, revenue streams, year-end and current accounting arrangements. Discuss your company compliance needs with GCG.
Use free zone versus mainland if the operating model itself needs review.
Applicable period: Actual company tax period; the audit decision’s commencement rule and each other decision’s effective dates apply separately.
Ministerial Decision 229 of 2025 applies from 1 June 2023 under its effective-date provision. Its issue year is not the first tax period it governs. (U5, Article 7)
