Qualifying income broadly includes: income from transactions with other free zone persons, income from qualifying activities as specified by Cabinet Decision No. 55 of 2023, and passive income such as dividends and capital gains from qualifying shareholdings. Income that does not qualify — such as revenue from mainland UAE customers in many circumstances, or from non-qualifying activities — is taxed at 9%. The boundary between qualifying and non-qualifying income is one of the most technically complex areas of UAE corporate tax for free zone businesses. Documenting your income streams correctly from year one is essential.
See also: Free Zone Person (Qualifying), Free Zone, Corporate Tax (CT)
