UAE Federal Tax Authority Issues Corporate Tax Guide for Free Zone Persons

Qualifying Free Zone Persons enjoy a Corporate Tax rate of 0% on income that meets the qualifying criteria

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Staff Writer, TLR

Published on May 29, 2024, 13:49:21


corporate tax guide, uae federal tax authority, fta


The Federal Tax Authority (FTA)  has taken a significant step towards clarifying the application of Corporate Tax within Free Zones by issuing a comprehensive guide.

The guide aims to streamline the understanding and implementation of Corporate Tax regulations for Free Zone Persons, particularly in light of the Free Zone Corporate Tax regime.

Under this regime, Qualifying Free Zone Persons benefit from a favourable 0% Corporate Tax rate on their Qualifying Income. The guide serves as a roadmap for businesses operating within Free Zones, offering detailed insights into the conditions for eligibility as a Qualifying Free Zone Person and the types of activities that qualify for this advantageous tax treatment.

By providing illustrative examples, the guide assists businesses in navigating the complexities of Corporate Tax Law as it pertains to Free Zone operations. It elucidates key concepts such as the calculation of Corporate Tax, the determination of Qualifying Income and the treatment of income derived from various sources, including immovable property and Qualifying Intellectual Property.

Furthermore, the guide addresses the importance of maintaining a substantial presence for Qualifying Free Zone Persons and outlines criteria for identifying Permanent Establishments both within and outside the Free Zones.

It underscores the FTA's commitment to ensuring compliance with tax regulations while facilitating the growth of businesses operating within Free Zones.

Recognizing the vital role played by Free Zones in bolstering the UAE economy, the FTA emphasises the manifold benefits offered by these economic hubs. These include relaxed foreign ownership restrictions, streamlined administrative procedures and state-of-the-art infrastructure, all of which contribute to fostering a conducive environment for business growth and innovation.

The FTA urges all Free Zone Persons to thoroughly review the guide to gain a comprehensive understanding of the regulatory framework governing Corporate Tax within Free Zones.

The guide, along with other relevant implementing decisions, is readily accessible on the FTA's official website, reaffirming the authority's commitment to transparency and accessibility in tax administration.

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