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Free zone 0% checker for QFZP status

Answer nine questions and enter one year's figures to see whether a free zone company is likely to keep the 0% corporate tax rate. It runs the de minimis test and shows the cost of losing the status.

Free to use. No sign-up. Your figures stay in your browser.

QFZP in four lines

Qualifying Income
0%
Other taxable income
9%, no 375k band
De minimis limit
Lower of 5% or AED 5m
Fail a condition
Lost for 5 periods

FDL 47/2022, Arts. 3(2) and 18; Ministerial Decision 229/2025, Arts. 3 and 5

Free tool · UAE corporate tax

Free zone 0% checker

Answer nine questions and enter one year's figures. We test the Qualifying Free Zone Person (QFZP) conditions, run the de minimis test with the correct exclusions, and estimate tax at 0% and 9%, plus what losing the status could cost.

Status

Who can be a QFZP at all.

Is the business registered in a UAE free zone?

A company incorporated, established or registered in a free zone, including a branch of a foreign company.

Has the business elected to be taxed at the standard rates instead?

A QFZP can choose to give up the 0% rate and be taxed like a mainland company.

Did the business fail any QFZP condition in its previous four tax periods?

A failure removes the status from the start of that period and for the next four, so an old failure can still apply today.

Substance in the free zone

Tested for each activity, against its scale.

Are your core income-generating activities carried out in the free zone?

The key functions that create the profit, not just admin or support work.

Do you have enough qualified full-time employees in the free zone for that level of activity?
Do you have adequate assets and spend an adequate amount on operating costs in the free zone?

Compliance

Conditions that apply whatever the size of the business.

Are dealings with related parties priced at arm's length and documented?

For example, sales to, or services from, a parent, sister company or owner. Covers transfer pricing and its documentation.

Will the business have audited financial statements for this tax period?

Required for every QFZP, whatever its revenue.

Does the business distribute goods in or from a Designated Zone?

For tax periods starting on or after 1 January 2026, distributors relying on this Qualifying Activity need an agreed-upon procedures report from an independent auditor, sent to the FTA.

Revenue and profit

One tax period (usually your financial year).

All revenue for the period, from every source.

Revenue from:

  • mainland (non-free-zone) customers, for anything that is not a Qualifying Activity, such as consulting, marketing or IT services
  • Excluded Activities, including most sales to individuals
  • free zone customers who pass the goods or service on to someone else, so are not the end user
What are Qualifying and Excluded Activities?

Qualifying Activities

  • Manufacturing goods or materials
  • Processing goods or materials
  • Trading Qualifying Commodities (with a quoted price)
  • Holding shares and securities as investments (12 months or more)
  • Owning, managing and operating ships in international transport
  • Regulated reinsurance
  • Regulated fund management
  • Regulated wealth and investment management
  • Headquarter services to related parties
  • Treasury and financing for related parties or on its own account
  • Aircraft financing and leasing
  • Distributing goods in or from a Designated Zone to resellers, processors or public benefit entities
  • Logistics services
  • Activities ancillary to any of the above

Excluded Activities

  • Transactions with individuals (natural persons), except for ships, fund management, wealth management and aircraft leasing
  • Regulated banking
  • Regulated insurance (reinsurance and captive insurance aside)
  • Regulated finance and leasing (except the items above)
  • Owning or exploiting immovable property, except commercial property in a free zone dealt with free zone persons
  • Activities ancillary to any of the above

Source: Ministerial Decision 229 of 2025, Art. 2 (summarised). Each activity has detailed conditions.

Revenue that is left out of the de minimis test (optional)

These are taxed at 9% even for a QFZP, but they are removed from both sides of the de minimis test. Do not include them in non-qualifying revenue above.

Revenue attributable to a permanent establishment on the mainland or in another country.

Commercial property in a free zone let or sold to mainland persons, and residential or other non-commercial property in a free zone dealt with anyone.

For example trademark royalties. Patents and copyrighted software can qualify under a separate formula, which this tool does not calculate.

Accounting profit after tax adjustments. Enter 0 if the business made a loss.

I know my taxable income from the 9% items (optional)

If you leave this blank, we share your profit in proportion to revenue.

Your indicative result

Your result will appear here

Start with the questions. The result updates as you answer.

Why

    De minimis test

    Enter total revenue and non-qualifying revenue to run the test.

    Indicative tax for this period

    Enter total revenue and taxable income to see the 0% / 9% split.

    How we calculated this
    1. Fill in the figures to see each step.
    If a condition is failed: the business stops being a QFZP from the start of the tax period in which the failure happens, and stays out for the next four tax periods. That is five tax periods taxed at the standard rates.

    Indicative only. This tool is not tax or legal advice and does not confirm QFZP status. The result depends on facts it cannot test, such as how each activity is classified, who the beneficial recipient is, and whether substance is adequate for your activity. Rules checked against UAE Ministry of Finance and Federal Tax Authority publications, October 2026.

    Want a proper QFZP review?

    DirhamWise can review your revenue streams, substance and documents before you file.

    Ask DirhamWise on WhatsApp Ask DirhamWise

    How it works

    The checker gives one of three results: any failed condition means likely not eligible, any uncertain answer means at risk, and likely eligible needs all nine answers met and valid figures.

    1. Basic eligibility

      The business must be a juridical person incorporated, established or registered in a free zone, including a branch of a foreign company. It must not have elected for the standard rates, or failed a condition in the previous four tax periods.

    2. Adequate substance

      Core income-generating activities, qualified full-time staff, assets and operating costs must be adequate in the free zone for the scale of the business. Outsourcing within a free zone is allowed with adequate supervision (Cabinet Decision 100/2023, Art. 8).

    3. Conditions for every QFZP

      Related-party dealings at arm's length and documented, and audited financial statements for the period whatever the revenue. Designated Zone distributors also need an agreed-upon procedures report for periods starting on or after 1 January 2026.

    4. The de minimis test

      Non-qualifying revenue must not exceed 5% of total revenue or AED 5,000,000, whichever is lower. Branch revenue, certain free zone property revenue and non-qualifying IP revenue are taken out of both sides of the test first.

    5. Tax and the cost of failing

      Qualifying Income is taxed at 0% and other taxable income at 9%, then compared with tax at the standard rates. Failing a condition removes the status from the start of that period and for the next four, so the difference is shown over five periods.

    Three worked examples

    The figures below come from the calculator above, using the inputs described.

    • A comfortable pass

      All nine answers met. Total revenue AED 10,000,000, non-qualifying revenue AED 300,000 and taxable income AED 2,000,000.

      De minimis limit (5% of 10m)
      AED 500,000.00
      Share of the limit used
      60%
      Tax as a QFZP
      AED 0.00
      Tax at standard rates, per period
      AED 146,250.00
      Cost of losing the status, 5 periods AED 731,250.00

      Result: likely eligible. Non-qualifying revenue within the limit is treated as Qualifying Income.

    • Caught by the AED 5 million cap

      All nine answers met. Total revenue AED 200,000,000, non-qualifying revenue AED 5,000,001, which is 2.5% of revenue, and taxable income AED 20,000,000.

      5% of revenue
      AED 10,000,000.00
      Limit after the AED 5m cap
      AED 5,000,000.00
      Over the limit by
      AED 1.00
      Tax at standard rates, per period
      AED 1,766,250.00
      Extra tax over 5 periods AED 8,831,250.00

      Result: likely not eligible, although non-qualifying revenue is only 2.5% of the total.

    • Branch revenue changes the answer

      Total revenue AED 10,000,000, of which AED 2,000,000 is earned through a mainland branch. Non-qualifying revenue AED 450,000.

      Revenue in the test
      AED 8,000,000.00
      Limit (5% of 8m)
      AED 400,000.00
      Non-qualifying share
      5.6%
      Over the limit by AED 50,000.00

      Measured against the full AED 10m the test would pass at 4.5%. Taking the branch out of both sides makes it fail.

    Frequently asked questions

    Short answers about the free zone 0% checker and the rules behind it.

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    What is a Qualifying Free Zone Person?

    A free zone company or branch that meets every condition in Article 18 of the corporate tax law and the Ministerial Decisions under it: adequate substance in the free zone, Qualifying Income, no election for the standard rates, arm's-length related-party dealings with transfer pricing documentation, non-qualifying revenue within the de minimis limit, and audited financial statements. A QFZP pays 0% on Qualifying Income.

    What is the de minimis rule for free zone companies?

    Non-qualifying revenue must not exceed 5% of total revenue or AED 5,000,000, whichever is lower (Ministerial Decision 229/2025, Article 3). Revenue from a branch outside the free zone, certain free zone property revenue and non-qualifying IP revenue are removed from both sides of the test, because they are taxed at 9% anyway.

    What happens if a free zone company fails a QFZP condition?

    It stops being a QFZP from the beginning of the tax period in which it fails and for the following four tax periods, so five periods in total are taxed at the standard rates (Ministerial Decision 229/2025, Article 5(2)).

    Does a QFZP get the AED 375,000 0% band?

    No. A QFZP pays 0% on Qualifying Income and 9% on taxable income that is not Qualifying Income, with no AED 375,000 band (Article 3(2) of the corporate tax law). The band applies under the standard rates, for example after the status is lost.

    Does a QFZP need audited financial statements?

    Yes. Every Qualifying Free Zone Person must prepare audited financial statements, whatever its revenue (Ministerial Decision 84/2025 and Ministerial Decision 229/2025, Article 5(1)).

    Can a QFZP claim Small Business Relief?

    No. Qualifying Free Zone Persons are excluded from Small Business Relief, so a small free zone company has to choose its route on the QFZP rules alone.

    Which activities count as Qualifying Activities?

    Qualifying and Excluded Activities are listed in Ministerial Decision 229/2025, which replaced Ministerial Decision 265/2023. The checker lists them in its reference panel. Whether a particular activity qualifies depends on its facts, including who the beneficial recipient is, so treat the list as a starting point.

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    About these results

    This checker gives an indicative result only. It is not tax or legal advice, and it does not confirm QFZP status. The result depends on facts it cannot test, such as how each activity is classified, who the beneficial recipient is and whether substance is adequate. It does not calculate qualifying IP income, tax losses, exempt income, the domestic minimum top-up tax or tax groups, and it shares profit between 0% and 9% in proportion to revenue unless you enter the 9% figure. The figures you type are not sent anywhere unless you send them to us.

    Rules last checked against the primary sources on 7 October 2026.

    Primary sources

    Not sure your free zone company still qualifies?

    DirhamWise reviews revenue classification, the de minimis test and the audit requirement for free zone companies, and prepares the corporate tax return. Send your figures on WhatsApp or through the form.

    Ask us to check your figures

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