A free zone licence alone won't get you 0%.
The 0% rate belongs to a Qualifying Free Zone Person, and only on qualifying income. Miss one condition and the standard 9% applies. Take the two-minute test and see exactly where you stand.
- conditions tested
- 9
- to your result
- 2 min
- what's at stake
- 0% vs 9%
The de minimis trap
The cap is the lower of AED 5m or 5% of revenue.
- Revenue
- AED 20,000,000
- Real ceiling
- AED 1,000,000
- Mainland billing
- AED 2,000,000
Under the AED 5m headline, and still over the real cap by double. That is five years at 9%.
The nine conditions
What decides whether you keep the 0% rate
Free zone status is tested every tax period, not just at setup. Each condition has to hold. Miss one and that income moves to the standard 9%.
The assessment
Nine questions to your QFZP standing
Pick the option closest to your reality. Your standing builds as you go.
How is your business legally set up?
Think about the entity on the licence, not how you describe the business.
Reference
The rules, in plain language
0%
on qualifying income for a Qualifying Free Zone Person
9%
standard rate on taxable income above AED 375,000
5% / AED 5m
de minimis cap on non-qualifying revenue, whichever is lower
5 years
out of QFZP status after failing a condition
Which activities can qualify
- ✓Manufacturing of goods or materials
- ✓Processing of goods or materials
- ✓Trading of qualifying commodities
- ✓Holding shares and other securities
- ✓Ship ownership, management and operation
- ✓Reinsurance services
- ✓Fund management services
- ✓Wealth and investment management
- ✓Headquarter services to related parties
- ✓Treasury and financing to related parties
- ✓Aircraft financing and leasing
- ✓Distribution in or from a designated zone
- ✓Logistics services
This tool is an indicative self-check, not tax advice. QFZP rules are fact specific and turn on the detail of your activities, income and structure. Federal Decree-Law No. 47 of 2022, Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 229 of 2025 govern the regime. Confirm your position with a qualified adviser before filing.
Frequently asked questions
Does a free zone company pay 0% corporate tax in the UAE?
Only on its qualifying income, and only while it meets every condition of Article 18 of Federal Decree-Law No. 47 of 2022. A free zone address on its own changes nothing. Income that is not qualifying income is taxed at 9%, and a company that fails any condition loses the 0% rate on everything.
What is the de minimis threshold for a QFZP?
Non-qualifying revenue must not exceed the lower of AED 5,000,000 or 5% of total revenue. The word lower is the one that catches people. A company turning over AED 20 million has a ceiling of AED 1 million, not 5, because 5% of its revenue is the smaller of the two figures.
What happens if we fail one of the conditions?
The company stops being a Qualifying Free Zone Person from the start of that tax period and stays out of the regime for the four tax periods after it. That is five years at 9%, triggered by one condition in one year, which is why the arithmetic is worth checking before the year closes rather than after.
Do we need audited accounts to keep the 0% rate?
Yes. Preparing audited financial statements is a condition in its own right under Ministerial Decision No. 229 of 2025, not a formality that follows from the rest. A company with perfect substance and no audit does not qualify.
Can we sell to mainland customers and stay qualifying?
Yes, within the de minimis threshold. Revenue from a mainland customer who is not itself a free zone person is generally non-qualifying, so it counts toward the ceiling. Above the ceiling the exemption goes, which is why the mainland side of a free zone business is worth measuring rather than estimating.
Not sure you'd pass? Let's check it properly.
A free, no-obligation review with our corporate tax team. If you already qualify, that is the answer you will get.