FTA Decision No. 6 of 2026, issued 2 June 2026, requires Qualifying Free Zone Persons (QFZPs) that distribute goods or materials in or from a Designated Zone to obtain an Agreed-Upon Procedures (AUP) report under ISRS 4400 from an independent, UAE-licensed auditor. The report must verify (1) that customers are genuine resellers and (2) that imported goods entered the UAE through a Designated Zone. It applies to tax periods starting on or after 1 January 2026, and is due within 30 days of the Corporate Tax filing deadline. Missing it means the distribution activity loses its qualifying status risking the 0% rate and possibly QFZP status altogether.

Who is Affected?

FTA Decision No. 6 of 2026 applies to Qualifying Free Zone Persons (QFZPs) whose qualifying activity is the distribution of goods or materials in or from a Designated Zone the activity defined under paragraph (l), Clause 1, Article 2 of Ministerial Decision No. 229 of 2025, and made subject to additional procedures under Ministerial Decision No. 84 of 2025. FTA Decision No. 6 of 2026 is the instrument that now sets out exactly what those additional procedures involve.

Two boundary points are worth flagging:

• It’s activity-specific, not entity-wide. This is not a blanket requirement for every free zone company, or even every QFZP  it attaches specifically to the distribution-from-a-Designated-Zone activity.
• It’s per-entity within groups. If your group relies on this activity across multiple entities, each affected entity’s compliance needs to be assessed individually.

Businesses operating from Designated Zones such as JAFZA, KIZAD, and other customs-controlled zones that buy and on-sell goods make up the core affected population; in short, this is a Designated Zone distribution compliance requirement, not a general free zone one.

The Core Requirement: An Independent AUP Report Under ISRS 4400

Affected QFZPs must obtain an Agreed-Upon Procedures (AUP) report from an independent external auditor. This can be performed by the entity’s statutory auditor (the firm handling the annual financial statement audit) or by any other independent auditor licensed to practise in the UAE. The report must follow the International Standard on Related Services (ISRS) 4400, issued by the IAASB, alongside UAE auditing legislation.

An AUP engagement is not the same as an audit: the auditor carries out specific, prescribed procedures including sampling and testing and reports factual findings rather than an opinion. Under the Decision, those procedures test two conditions central to the distribution qualifying activity:

1. Your customers are genuine resellers

The auditor must verify that the QFZP supplies goods or materials to customers who acquire them for resale or onward supply, or to process or alter for the purpose of sale or resale. In short, the benefit is built for genuine wholesale distribution, not end-user supply and the AUP report is how this gets tested in practice, customer by sampled customer.

2. Imported goods enter the UAE through a Designated Zone

Where the QFZP imports goods into the UAE, the auditor must confirm those goods entered through a Designated Zone, consistent with the qualifying activity’s conditions. What was once a purely operational logistics decision where goods physically enter the country is now a tested tax compliance fact.

Documentation You Must Collect and Retain Under FTA Decision No. 6 of 2026

The Decision leaves no room for verbal assurance. To support the auditor’s procedures, QFZPs must actively collect, maintain, and retain robust records.

Evidence of customer reseller status:

• Valid business, trade, or commercial licences of customers, showing trading or commercial activity
• Signed declarations or written confirmations from customers that goods are acquired for resale, onward supply, or processing/alteration for sale or resale
• Sales agreements, invoices, and purchase orders demonstrating the onward supply chain. 

Evidence of importation through a Designated Zone:

• Import declarations and customs clearance documentation showing entry into the UAE through a Designated Zone
• Shipping documentation, including bills of lading and airway bills. 

The Deadline & a Nuance That Matters 

The completed AUP report must be submitted to the FTA no later than 30 days after the deadline for filing the Corporate Tax return for the relevant tax period.

Note the reference point carefully: the 30 days run from the statutory filing deadline, not from the date you actually file. Filing your CT return early doesn’t move the AUP due date forward but that doesn’t mean the report should wait until after filing, either. ISRS 4400 procedures, sampling, documentation review, and reporting take weeks to do properly, and auditor capacity will tighten as the first wave of deadlines approaches.

For a calendar-year 2026 tax period, the practical timeline looks like this:

1. Evidence file built through 2026
2. AUP procedures performed alongside or after year-end close
3. CT return filed by 30 September 2027
4. AUP report submitted to the FTA within 30 days thereafter

What Happens If You Fail to Comply 

The consequence is stated plainly: a QFZP that fails to submit the AUP report within the prescribed timeframe will not be regarded as having met the conditions for its distribution activity to be treated as a qualifying activity.

The knock-on effects are significant:

• Income from the distribution activity stops being qualifying income
• Non-qualifying revenue can breach the de minimis threshold of the QFZP regime, depending on the amounts involved
• A de minimis breach doesn’t just tax the offending income it can cost the entity its QFZP status altogether, resulting in taxation at 9% and exclusion from the regime for the rest of that tax period plus the following four tax periods

Measured against that exposure, the cost and effort of a timely, well-prepared AUP engagement is negligible next to what’s protected: your 0% corporate tax UAE free zone benefit. This is among the highest-ROI compliance tasks on any Designated Zone distributor’s calendar.

The Bigger Picture: UAE’s Evidence-Based Compliance Era 

FTA Decision No. 6 of 2026 is best understood as part of a clear regulatory pattern across UAE tax in 2026:

• E-invoicing will make every invoice a structured, validated, transmitted data record from January 2027
• Pillar Two brings a 250-data-point information return for large groups
• The free zone regime’s most valuable benefit now carries an annual independent verification requirement

The direction is unmistakable: UAE tax benefits aren’t being withdrawn, they’re being professionalised. Businesses that build evidence into their processes keep their benefits without drama. Businesses that rely on assertion will find assertion no longer carries.

KGRN’s Six-Step Readiness Programme 

Confirm your classification

Verify which entities and revenue streams rely on the distribution-in-or-from-a-Designated-Zone qualifying activity, and confirm your Designated Zone status with the relevant authority where needed.

Segment your customer book before the auditor does

Classify customers as resellers, processors, or end-users. Any end-user revenue in the mix needs a decision now, not a surprise finding under sampling.

Rebuild customer onboarding

Make reseller declarations, trade licence collection, and periodic refresh a standard step in onboarding and credit approval. Retro-fit your existing customer base progressively, starting with the largest customers by value.

Trace and fix your import routes

Map every inbound logistics flow against Designated Zone entry and reconcile customs declarations accordingly. Routing exceptions are operational choices today; next year they’re audit findings.

Build the master registers

A customer register (with licence, declaration, and transaction linkage) and an import register (by entry point and value) turn the AUP engagement from an excavation into a review reducing both cost and risk.

Engage your auditor early and diarise backward 

Agree the engagement scope and sampling methodology well before year-end, and set internal evidence deadlines working back from the CT filing date and the 30-day window.

How KGRN can Help

KGRN Chartered Accountants is positioned on both sides of this requirement, a distinction few firms in the UAE can offer within a single engagement.

• As Corporate Tax advisers, we assess QFZP status, qualifying activity classification, de minimis exposure, and the design of compliant customer onboarding and documentation frameworks.
• As a registered audit firm regulated in the UAE, we perform the ISRS 4400 Agreed-Upon Procedures engagement itself and deliver the AUP report the FTA requires end-to-end AUP report UAE support under one roof.

For Designated Zone distributors, we offer a focused AUP Readiness Assessment: a review of your customer file, import routing, and documentation against the Decision’s requirements, with a gap report and remediation plan completed well before your first deadline, so the formal AUP engagement proceeds without findings that put your 0% rate at risk.

Contact KGRN today to schedule your AUP Readiness Assessment

Frequently Asked Questions

1. Does FTA Decision No. 6 of 2026 apply to all free zone companies?
   No. It applies specifically to Qualifying Free Zone Persons carrying out the qualifying activity of distribution of goods or materials in or from a Designated Zone. Other free zone businesses and other qualifying activities are not subject to this AUP requirement.
2. Does the Decision change the 0% Corporate Tax rate?
   No. The rate and the conditions for qualifying income are unchanged. The Decision introduces the evidence and verification procedures by which compliance with the distribution activity’s conditions must now be demonstrated.
3. Who can prepare the AUP report?
   An independent external auditor licensed in the UAE either the entity’s statutory auditor or another independent licensed auditor. The report must follow ISRS 4400.
4. When is the first report due?
   The Decision applies to tax periods beginning on or after 1 January 2026. The AUP report is due within 30 days after the Corporate Tax return filing deadline for the relevant period for calendar-year 2026, within 30 days after the 30 September 2027 filing deadline.
5. What if some of our customers are end-users rather than resellers?
   That’s precisely the situation to identify and address now. Depending on materiality, it may affect the classification of the related income and your de minimis position. Early assessment allows the position to be managed; discovery under the auditor’s sampling does not.
6. We import some goods through ports outside Designated Zones. Is that a problem?
   Import routing is now a tested condition. Flows that don’t enter through a Designated Zone should be reviewed against the qualifying activity conditions and, where possible, re-routed while it remains an operational decision rather than a reported finding.