As of January 2026, the UAE’s Corporate Tax landscape has moved to strict enforcement. For free zone businesses, the stakes are high. The 0% Corporate Tax UAE rate is a major draw, but the Federal Tax Authority (FTA) now applies rigorous standards under Ministerial Decision 229 of 2025.
If your business fails to meet the updated criteria this year, you face the standard 9% corporate tax rate UAE on all taxable income. This guide explains how to maintain your QFZP status and follow the latest filing rules UAE.
Conex Accounting is a trusted accounting and tax advisory firm in Dubai, UAE, providing end-to-end compliance support to businesses across mainland and free zone jurisdictions. We specialize in UAE Corporate Tax advisory, corporate tax registration and return filing, VAT compliance, financial reporting, and audit-ready accounting solutions, helping free zone entities maintain QFZP eligibility and stay fully aligned with the latest Federal Tax Authority (FTA) requirements.
What is a Qualifying Free Zone Person (QFZP) in 2026?
Holding a license is no longer enough to get tax relief. To be a Qualifying Free Zone Person (QFZP), you must satisfy these audited criteria:
- Meet Free Zone Substance Requirements: You must have a physical office and enough qualified staff in the zone. All core activities must happen within a UAE free zone or designated zone.
- Earn Qualifying Income: Your revenue must come from approved sources. This includes transactions with other free zone persons or specific international activities.
- Prepare Audited Financial Statements: All QFZPs must have audited accounts. The FTA uses these to verify your total revenue and tax claims.
- Follow the De Minimis Threshold: Your non-qualifying income must stay below 5% of your total revenue or AED 5 million—whichever is lower.
Major Update: Ministerial Decision 229 of 2025
This decision simplifies and expands what counts as a qualifying activity for free zone companies. It replaces older rules and removes previous confusion.
Key Changes for 2026
- Trading of Qualifying Commodities: The “raw form” rule is gone. You can now qualify for 0% tax even if you process products, as long as they have a quoted price from a recognized exchange.
- Environmental Commodities: Trading carbon credits or renewable energy certificates now officially counts for the 0% rate.
- Treasury and Financing Services: You can now include financing for your own account (self-investment) as a qualifying activity.
- Distribution of Goods: Supplies to a public benefit entity from a designated zone now qualify for the 0% rate.
2026 Deadlines: The “September 30” Milestone
For businesses operating on a calendar year, September 30, 2026, is the most important date. You must submit your corporate tax return and pay any tax due by this day.
| Requirement | Deadline (Dec-End FY) | Penalty for Delay |
| Corporate Tax CT Registration | Within 3 months of setup | AED 10,000 |
| First Tax Return Filing | Sept 30, 2026 | AED 500 – 1,000 per month |
| Settling Tax Liability | Sept 30, 2026 | 14% per year (monthly) |
Note: Even if you qualify for 0% tax, you must file a return. The FTA uses your filing to confirm you are still a taxable person eligible for relief.
How to Ensure Compliance
Follow this checklist to protect your status under the federal corporate tax law:
- Review Revenue Mix: Check if your services to related parties follow the “arm’s length” principle.
- Verify Substance: Ensure your office and staff levels match your business size to meet free zone substance requirements.
- Check IP Rules: If you earn from software or patents, ensure they meet the qualifying intellectual property standards.
- Register Early: New companies must register for federal decree law compliance within three months of opening.
About Conex Accounting: Your Partner in Success
At Conex Accounting, we have seen first-hand how minor compliance gaps can lead to major financial losses. If your business fails to meet the updated “Qualifying” criteria this year, you face the standard 9% corporate tax rate UAE on all taxable income. This comprehensive guide, backed by Conex’s 15 years of experience, explains how to maintain your QFZP status and follow the latest filing rules UAE.
Since 2010, Conex Accounting has been on a mission to transform financial management in the UAE. We aren’t just bookkeepers; we are strategic partners.
15 Years of Experience: We have navigated every major change in UAE law, from the introduction of VAT to the current Corporate Tax era.
Expert Team: Our team holds top-tier accounting certificates and stays updated on every federal decree law.
Comprehensive Care: From VAT Return Filing to Internal Audits and Risk Management, we provide a 360-degree financial shield for your business.
FAQs for UAE Corporate Tax – Free Zone Entities
Is UAE Corporate Tax applicable to Free Zone companies?
Yes. Free zone companies are subject to UAE Corporate Tax, but they may qualify for 0% Corporate Tax if they meet the requirements to become a Qualifying Free Zone Person (QFZP).
What is a Qualifying Free Zone Person (QFZP)?
A Qualifying Free Zone Person (QFZP) is a free zone entity that satisfies UAE Corporate Tax conditions such as:
- meeting substance requirements,
- earning qualifying income,
- preparing audited financial statements, and
- staying within the de minimis threshold for non-qualifying income.
Do Free Zone companies need to register for Corporate Tax in UAE?
Yes. Even if a free zone business qualifies for 0% Corporate Tax, it must still complete Corporate Tax registration and file annual returns.
What happens if a Free Zone company fails to meet QFZP conditions?
If a Free Zone company fails QFZP requirements, it may lose 0% treatment and become subject to the standard 9% Corporate Tax rate on taxable income.
Is audited financial statement mandatory for QFZP?
Yes. Audited financial statements are mandatory for QFZP eligibility because the FTA uses them to confirm revenue composition and tax compliance.
What is the De Minimis threshold for Free Zone Corporate Tax?
The de minimis threshold means non-qualifying income must not exceed:
- 5% of total revenue, or
- AED 5 million,
whichever is lower.
Conclusion: Secure Your Tax Status
The shift to a regulated environment means your records must be perfect. To keep your edge, ensure your tax structure is solid.
Ready to secure your 0% tax status? Our registered tax agents can help you navigate the corporate tax guide UAE and the latest Ministerial Decisions.
Contact our Corporate Tax Services UAE team today for a Free Compliance Audit.
Disclaimer: This guide is based on publicly available legislation, ministerial decisions, and regulatory guidance applicable as of 2026. Corporate tax treatment may vary based on facts and interpretations. Businesses should seek professional advice before making tax decisions.