Corporate Tax in UAE and free zones

Legislation related to corporate tax for free zones in the UAE

(Clarifies the conditions of the eligible person residing in the free zone)

• (Shows the tax rate on the eligible person)

• From Law 47 of 2022 Corporate Tax

• Article 18 of Law 47 of 2022 Corporate Tax

• (Clarifies the conditions of the eligible person residing in the free zone)

• Cabinet Resolution No. (100) of 2023

• (Qualifying income conditions clarified)

• Ministerial Decree No. (265) of 2023

• (Shows eligible and excluded activities)

This paragraph clarifies that the tax rate for the qualified existing person in the free zones shall be as follows:

a ) Zero percent on eligible income

b ) 9 percent of the subject income that is not eligible under Article 18 of this Decree Law

a. Maintains a realistic and sufficient presence in the State.

B . Achieve qualifying income as determined by a decision issued by the Council of Ministers upon the proposal of the Minister.

c. Has not elected to be subject to corporate tax under Article (19) of the Corporate Tax Law.

d. Comply with the provisions of Articles (34) and (55) of the Corporate Tax Law. (Meet neutral price requirements)

e. Meet any other conditions as the Minister may specify.

• Primary income is realized within the free zone

• Having sufficient assets

• Employing appropriate staff for the activity

• Expenditures of operating expenses appropriate to the activity

• Unless its ineligible revenues exceed the minimum 5% of the total revenues or AED 5 million, whichever is lower

• Prepare audited financial statements

B- Achieves a qualifying income

• Income realized from transactions with a person within the free zone, excluding income from excluded activities

• Income from transactions with a person who is not in the free zone in connection with eligible activities

• Income from the acquisition or exploitation of qualified intellectual property

• Any other income that meets the minimum requirements of the eligible person residing in the free zone

Group A

1- Manufacture and processing of goods or materials

2- Distribution of goods or materials in or from a specific area

3- Logistics

4. Qualifying Commodity Trading

5. Eligible Intellectual Property

Group B

1- Holding shares and other securities for investment purposes

2- Reinsurance Services

3- Fund Management Services

4- Wealth and Investment Management Services

Group C

1- Owning, managing and operating ships

2- Aircraft financing and leasing

Group D

1. Services of the headquarters of related parties

2- Treasury and related party financing services

Any activity supporting the eligible activities

Group A

1- Regulated banking activities

2. Insurance activities subject to regulatory supervision

3. Regulated financing and leasing activities

Group B

1- Owning or exploiting real estate except for commercial properties located in the free zone

Group C

1- Any transactions with natural persons except for some activities

Group D

1. Services of the headquarters of related parties

2- Treasury and related party financing services

C- Ineligible Revenue

(1) Excluded activities.

(2) Activities that are not eligible activities when the other party to the transaction is a person who is not located in the free zone.

(3) Transactions with a person residing in the free zone when such person residing in the free zone is not a beneficiary of the service or commodity concerned.

To request a tax service quote click here