Chapter 5 – Qualifying Free Zone Person Under UAE Corporate Tax Law

This chapter contains Article 18 and Article 19 of the corporate tax law which defines the framework for Qualifying Free Zone Persons (QFZP) for corporate tax purposes and election to be subject to corporate tax.

Article 18 – Qualifying Free Zone Person

Any person can operate a business in the Free Zones, but to be a qualifying freezone they must meet the following conditions:

a) A free zone person must maintain adequate substance in the UAE

b) Must derive qualifying income as specified in a decision issued by the Cabinet upon suggestions of the Minister.

c) Should not be elected for taxation under Corporate Tax.

d) Should maintain transfer pricing documentation along with the documentation.

e) Maintain audited Financial Statements for the recent and past tax periods.

f) Non-qualifying income must not breach the de-minimis threshold.

Article 19 – Election to be Subject to Corporate Tax

1. A Qualifying Free Zone Person can voluntarily make an election to be subject to Corporate Tax under Federal Decree Law No.47 of 2022, as per the rates specified in the law.

2. The election for corporate tax will be effective from either of:

1. The beginning of the Tax Period in which the election is made.
2. The start of the Tax Period that is subsequent to the Tax Period in which the election was made.

Related posts:

Chapter Four – Taxable Person & Corporate Tax Base Under UAE Corporate Tax Law   Chapter Three – Exempt Person Under UAE Corporate Tax Law  MoF New Decision – Unincorporated Partnerships Corporate Tax Accounting Standards in UAE: A Guide For Businesses Caculation of Corporate Tax liability & Reliefs