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not be applied against the QFZP’s Taxable Income, Manufacturing of goods or materials: Activities that
transferred, or carried forward. A QFZP cannot transfer might be treated as ancillary to the Qualifying Activity of
Tax Losses to, or receive Tax Losses from, another manufacturing of goods or materials, provided that they
Taxable Person. naturally and integrally complement the main Qualifying
Activity and meet the conditions. Ancillary activities
Beneficial Recipients: might include Post-sale activities and Customer support.

The 0% CT rate benefit is intended to apply to transactions This does not necessarily mean that any activity
between FZPs. that might be ancillary to the Qualifying Activity of
manufacturing goods or materials will be treated as a
However, to preserve the integrity of the rules, the Qualifying Activity in their own right or on a standalone
benefit only applies to those transactions if the recipient basis, if taken individually.
(i.e. the FZP) is the Beneficial Recipient of the relevant
services or goods and is not the conduit or intermediary Manufacturing does not include repairs. Repairs are
and the real beneficial recipient is a third party. typically classified as a service and the act of repairing
involves restoring or fixing existing products to their
De-minimis requirements: original or functional state, rather than creating a new
product (manufacturing) or substantially changing the
To preserve the integrity of the 0% Corporate Tax rate form or nature of a product (processing).
on Qualifying Income, where a free zone person derives
income that is outside the scope of the intended rules it Trading of Qualifying Commodities: Trading of Qualifying
will loose the benefits of QFZP unless it passes the De- Commodities involves physical trading and derivative
minimis test and requirements. trading for risk hedging. Qualifying Commodities include
metals, minerals, energy, and agricultural products in
The non-qualifying revenues does not exceed the lower their raw, unprocessed form, traded on a Recognized
of Commodities Exchange. Ancillary activities include
warehousing and delivery.
• AED 5 million, or
• 5% of the total revenue The Qualifying Commodity needs to be in a form that is
traded on a Recognised Commodities Exchange Market.
The FZP’s total revenue is the total of following revenues Metals, minerals, energy and agriculture commodities
derived from: that are traded on a Recognised Commodities Exchange
Market will be deemed to be in raw form when they
• Excluded activities. meet the conditions to be traded on the said exchange.
• Qualifying activities; & The trade itself does not need to be performed through
• Non-qualifying activities with non-FZP an exchange.

The FZP’s non-qualifying Revenue derived from: The HSN code can serve as an indicator in verifying if a
commodity still maintains its raw form. A mere alteration
• Excluded Activities, in HSN code due to some level of processing does not
• Activities that are not Qualifying Activities where the conclusively determine whether that commodity has lost
other party to the transaction is a non-FZP, and its raw form for the purposes of determining whether it
• Transactions with a FZP where such FZP is not the is a Qualifying Commodity.
Beneficial Recipient of the relevant services or Goods.
Holding of shares and other securities for investments
Not included in total revenue as well as in non-qualifying purposes: a major shareholder holding shares in a
revenue: company for investment purposes may also derive
income such as royalties or management fees from
• Income attributable to Domestic and foreign Permanent that company. Those other income streams would not
Establishment, constitute income from the Qualifying Activity of holding
• Immovable property outside free zone and non- shares and other securities for investment purposes.
commercial property within free zone.
• Intellectual property not related to QI. Investment activity of holding shares includes
investment planning, portfolio management and buying
Qualifying Activities and selling securities.

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