Qualifying Free Zone Person (QFZP): All 6 Conditions Explained

While Free Zone companies in the UAE can benefit from a 0% Corporate Tax rate, this is not automatic. To qualify as a QFZP, a company must meet 6 strict conditions.

The 6 Conditions

1. Adequate Substance: Maintain adequate staff and assets in the UAE Free Zone.
2. Qualifying Income: Derive income strictly from qualifying activities or transactions with other Free Zone persons.
3. No Election: Must not have elected to be subject to the standard 9% rate.
4. Transfer Pricing: Must comply with arm's length principles and transfer pricing documentation.
5. Non-Qualifying Revenue: Non-qualifying revenue must not exceed 5% of total revenue or AED 5,000,000 (whichever is lower).
6. Audited Financials: Prepare audited financial statements compliant with IFRS.

Failing even one condition means the entire company's income will be subject to the 9% rate. Our experts at Curatax LLC provide comprehensive QFZP gap analysis.