Page 5 - ICAI UAE TAX UPDATE_MAY 2024

3 UAE TAX UPDATES
3.1 Corporate Tax Guide on Free Zone Persons

On May 20, 2024, the Federal Tax Authority (FTA) streamlined procedures, modern infrastructure, and
released a Corporate Tax Guide focusing on “Free Zone varied business activities. The UAE CT rules offer a 0%
Persons” to offer general insights into the Corporate Tax CT rate on certain Qualifying Activities and transactions
(CT) treatment for Free Zone Persons (FZPs). for Free Zone companies meeting specific conditions.
Qualifying Free Zone Persons (QFZPs) are taxed at 0%
Following are the key clarifications that can be on Qualifying Income (QI) and 9% on non-QI.
summarized from the CT Guide issued by the FTA:
A free zone person shall be deemed to be a QFZPs unless
The Glossary one of the conditions to be QFZP is not met, or if the
QFZP makes an election to be subject to tax. However,
Abbreviation Word
if they are QFZP then they are excluded from certain tax
CIGA Core Income-Generating Activities reliefs. If a FZP does not meet all the conditions, it will
CT Corporate Tax no longer qualify to be a QFZP, and its income will be
subject to standard Corporate Tax rates and rules. Any
FAR Functions, Assets, & Risks Analysis
FZPs losing the QFZP status due to election or failure to
FS Financial Statements meet the criteria shall revert to standard CT rules from
FTA Federal Tax Authority the start of the relevant Tax Period and for the next four
periods.
FZP Free Zone Persons
QFZP Qualifying Free Zone Persons Every FZP should check with their respective Free Zone
QI Qualifying Income Authority to confirm if they operate in a Free Zone or
Designated Zone to avail the benefit of CT @ 0%. There
QIP Qualifying Intellectual Property is no separate list of Free Zones/Designated zones issued
UAE United Arab Emirates for CT purposes.

Background of Free Zone Persons Conditions to be a QFZP

Free Zones are crucial to the UAE economy, promoting The conditions of the Free Zone CT Regime require a
growth with benefits like relaxed foreign ownership, QFZP to:

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