A UAE free zone company registers for corporate tax and files a return like any other company. It pays 0% only on qualifying income, and only if it meets the conditions, including audited financial statements. Other income is taxed at 9% above AED 375,000. That makes clear, well-separated books essential.
Do free zone companies pay corporate tax?
They can pay 0% on qualifying income if they are a Qualifying Free Zone Person, and 9% on everything else (Ministry of Finance via WAM). Every free zone company still registers within 3 months of incorporation and files a return within 9 months of the year end (Federal Tax Authority). Whether a company qualifies depends on its activities, who it sells to and how its books are kept, so this is decided in the accounts, not on the licence.
What conditions affect the books?
- Audited financial statements every year, required for every Qualifying Free Zone Person whatever its size (Ministerial Decision No. 82 of 2023).
- Income split between qualifying and non-qualifying activities, so each can be measured.
- The de minimis test: non-qualifying income must stay within 5% of total revenue or AED 5 million, whichever is lower (Ministry of Finance via WAM). One large mainland sale can break it.
- Transfer pricing on dealings with related companies, including a mainland sister company.
“Registration for Corporate Tax purposes is available through the EmaraTax digital tax services platform.”
Which free zones do we cover?
All of them, because the tax rules are federal. That includes IFZA, Meydan, DMCC, JAFZA, DAFZA, Dubai South, SHAMS, SPC, SAIF Zone, Hamriyah, RAKEZ, Ajman Free Zone, KEZAD and Masdar City. Some zones also ask for accounts or audited statements at licence renewal; we keep your books ready for that date as well. Choosing Small Business Relief instead of the free zone regime is possible only if you give up Qualifying Free Zone Person status.
What we do each month and each year
- Monthly bookkeeping with qualifying and non-qualifying income tracked separately.
- A running de minimis check, so problems show up before the year end.
- VAT returns, if registered, 28 days after each quarter.
- Year-end accounts ready for your auditor; see our free zone audit page for zone requirements.
- The corporate tax return and free zone disclosures.
Frequently asked questions
My IFZA company only sells to mainland customers. Does it get 0%?
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Usually not on that income. Sales to mainland customers are generally non-qualifying, apart from specific exceptions, so check before the year end.
Does a small free zone company need an audit?
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Yes, if it wants to be a Qualifying Free Zone Person. Without an audit it is taxed like a mainland company.
Can I use Small Business Relief in a free zone?
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Only if you are not a Qualifying Free Zone Person. You cannot have both.
Sources
- Ministry of Finance announces new decisions relating to Corporate Tax for Free Zones (Cabinet Decision No. 55 of 2023, Ministerial Decision No. 139 of 2023) — WAM, Emirates News Agency. Checked 16 October 2026.
- FTA emphasises the need to submit tax returns and settle Corporate Tax payable within specified deadlines to avoid late payment penalties — Federal Tax Authority, 14 September 2025. Checked 23 October 2026.
- Ministerial Decision No. 82 of 2023 on audited financial statements (revenue above AED 50 million and Qualifying Free Zone Persons) — UAE Ministry of Finance. Checked 16 October 2026.
- FTA urges resident juridical persons with licences issued in December to register for Corporate Tax before end of December 2024 — Federal Tax Authority, 5 December 2024. Checked 23 October 2026.