UAE Corporate Tax: Free Zone Registration, Qualifying Income and Filing Dates

A UAE company whose financial year ended on 31 December 2024 had to file its first Corporate Tax return and settle the tax by 30 September 2025: nine months after the end of the tax period (Federal Decree-Law No. 47 of 2022, Articles 48 and 53). Companies with another year-end count nine months from their own year-end. For the financial year ended on 31 December 2025, the FTA gives 30 September 2026 as the deadline for filing the return and paying the tax (FTA news item on tax.gov.ae).

This memo sets out the rules a free zone company works to, with the legal source for each. The registration duty and the conditions for the 0% rate come first.

Registration with the Federal Tax Authority

Every taxable person registers for Corporate Tax with the Federal Tax Authority (FTA) and obtains a tax registration number within the timeline the FTA prescribes (Decree-Law No. 47 of 2022, Article 51). The FTA's Decision No. 3 of 2024 names free zone persons among those who must register. A juridical person, free zone persons included, that is incorporated, established or recognised in the UAE on or after 1 March 2024 must apply within three months of that date. Registration is filed on the FTA's EmaraTax portal.

A free zone company that expects to pay 0% as a Qualifying Free Zone Person registers like any other company. The FTA has stated that a taxable person who does not apply within the specified timeline faces an administrative penalty of AED 10,000. The FTA's late-registration penalty waiver initiative lets a person avoid that penalty by filing the first tax return within seven months of the end of the first tax period.

Qualifying Free Zone Person: the conditions

A free zone person is a Qualifying Free Zone Person (QFZP) only while it meets every condition of Article 18 of the Corporate Tax Law:

• it maintains adequate substance in the UAE;
• it derives Qualifying Income;
• it has not elected to be taxed under the standard regime (Article 19);
• it complies with the transfer pricing rules of Articles 34 and 55;
• it meets the further conditions set by the Minister of Finance: non-qualifying revenue within the de minimis limit, and audited financial statements (Ministerial Decision No. 229 of 2025, Article 5).

QFZP status applies when the conditions are met. A company that prefers the standard regime can elect out of it under Article 19. A QFZP pays 0% on Qualifying Income and 9% on its other taxable income (Article 3(2)).

What counts as Qualifying Income

Cabinet Decision No. 100 of 2023, Article 3, lists four categories:

1. income from transactions with another free zone person, except income from Excluded Activities;
2. income from transactions with a person outside the free zone regime, only for Qualifying Activities that are not Excluded Activities;
3. income from Qualifying Intellectual Property;
4. any other income, only while the de minimis requirements are met.

Ministerial Decision No. 229 of 2025, Article 2, lists the Qualifying Activities: manufacturing and processing of goods, trading of qualifying commodities, holding shares and securities for investment, ownership and operation of ships, reinsurance, fund management, wealth and investment management, headquarter services and treasury services to related parties, financing and leasing of aircraft, distribution from a designated zone, logistics services, and activities ancillary to these. Excluded Activities include transactions with natural persons (with listed exceptions), banking, insurance, finance and leasing, and the ownership or exploitation of immovable property.

Fees for consultancy or other services billed to a customer outside the free zone regime are not on the list of Qualifying Activities, so that revenue is non-qualifying revenue. Income attributable to a place of business in the UAE outside the free zone is taxed at 9% (Cabinet Decision No. 100 of 2023, Article 5).

The de minimis limit and what failing it costs

Non-qualifying revenue must stay within the lower of 5% of the company's total revenue for the tax period or AED 5,000,000 (Ministerial Decision No. 229 of 2025, Article 3). A QFZP that fails a condition at any time during a tax period stops being a QFZP from the start of that period and for the following four tax periods (Article 5(2)). A free zone company with a mainland customer base therefore calculates this limit before it relies on the 0% rate.

Substance

Cabinet Decision No. 100 of 2023, Article 8, sets what adequate substance means. For each activity the QFZP carries out its core income-generating activities in a free zone, has adequate assets, an adequate number of qualified full-time employees in a free zone and incurs an adequate amount of operating expenditure. It can outsource core income-generating activities to another person in a free zone if it supervises the work adequately. The decision does not fix numbers for these terms, so the file for each company records the facts behind each of the four items.

Key dates

Documents to have before the return

• audited financial statements for the period where the company is a QFZP;
• an income breakdown by counterparty (free zone person, mainland or foreign customer) and by activity, which is the basis for the de minimis calculation;
• the evidence for each substance item;
• the related-party transaction records that Article 55 may call for.

See our UAE incorporation guide and UAE banking services for related context on structuring entities from the ground up.

Sources

• Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Ministry of Finance, mof.gov.ae), Articles 3, 18, 19, 48, 51, 53, 55.
• Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person (mof.gov.ae), Articles 3, 4, 5, 8.
• Ministerial Decision No. 229 of 2025 on Qualifying Activities and Excluded Activities (mof.gov.ae), Articles 2, 3, 5. It replaced Ministerial Decision No. 265 of 2023 and keeps the same 5% / AED 5,000,000 limit.
• Federal Tax Authority, news of 27 February 2024 on FTA Decision No. 3 of 2024 on the specified timeframes for registration (tax.gov.ae), and the FTA notice on registering by 30 June 2024 (tax.gov.ae). Decision No. 3 of 2024, Article 3: three months from incorporation, establishment or recognition for a resident juridical person formed on or after 1 March 2024, a Free Zone Person included: tax.gov.ae/Datafolder/Files/Legislation/FTA%20Decision%20No.%203%20of%202024%20on%20Registration%20Timeline%20for%20Corporate%20Tax%20-%20For%20publishing.pdf.

INNOVA CG provides UAE Corporate Tax registration, return preparation and FTA liaison. This memo reflects the sources above as read on 2 October 2026 and is not legal or tax advice for any specific entity without a formal engagement.