This article has been researched and written by Steven Ireland and the team at Creation Business Consultants and has not used AI in generating this article.
The Ministry of Finance has released Cabinet Decision No. 55 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person and Ministerial Decision No. 139 of 2023 Regarding Qualifying Activities and Excluded Activities. These two decisions clarify whether a UAE free zone business qualifies to be treated as a Qualifying Free Zone Person (QFZP) under Article 18 of the UAE Corporate Tax law.
Cabinet Decision No. 55 states that Qualifying Income (0% tax) of the QFZP includes the following categories of income:
- Income derived from transactions with other free zone persons, except for income derived from excluded activities.
- Income derived from transactions with a non-free zone person, but only in respect of qualifying activities that are not excluded activities.
- Any other income provided that the qualifying free zone person satisfies the de minimis (explained below) requirements under Article (4) of this Decision.
Businesses will be classified as Taxable, Exempt, or Qualifying Free Zone Persons (QFZP) under the new regime, and must determine whether they fall into one of these categories and register accordingly. Certain exempt entities are nevertheless required to apply for and gain approval.