To be a Qualifying Free Zone Person, a business must: maintain adequate substance in a UAE free zone, derive qualifying income as defined by the FTA, not have made the election to be subject to the standard corporate tax regime, and meet the de minimis requirements for non-qualifying revenue. The substance test requires real physical presence — employees, expenditure, and management decisions — in the free zone, not simply a registered address. Businesses that fail the substance test lose the 0% benefit for that tax period.
Pro tip: If your free zone business earns any income from mainland UAE sources, get a professional analysis of whether that income is 'qualifying' before filing your first corporate tax return. An incorrect classification could trigger a 9% liability on all income, not just the mainland portion.
See also: Free Zone, Qualifying Income, Corporate Tax (CT)
