Am I Eligible for Qualified Freezone Person in UAE

The introduction of Corporate Tax in the UAE has created a new category for businesses known as Qualified Freezone Person QFZP. Many companies registered in Freezones are asking one question: Am I eligible for Qualified Freezone Person status

Understanding this concept is important because qualifying as a QFZP allows Freezone companies to continue enjoying a 0 percent corporate tax rate on qualifying income, while other businesses are taxed at 9 percent on profits above AED 375000.

At Bookkeeping Expert, we provide consultancy and full accounting and tax services to determine whether your company meets the conditions for QFZP and how to stay compliant.

What is a Qualified Freezone Person QFZP

A Qualified Freezone Person is a Freezone company that meets all the conditions set by the Federal Tax Authority FTA under the UAE Corporate Tax Law.

Key Conditions for QFZP Status

1. Adequate Substance The company must maintain sufficient staff, office space, and operations in the Freezone.
    

2. Qualifying Income The income must be from eligible activities such as transactions with other Freezone persons or from exports outside the UAE.
    

3. No Disqualification The company should not have elected to be subject to regular Corporate Tax or failed to comply with transfer pricing and accounting standards.
    

4. Compliance with Regulations Proper audited financial statements must be maintained and submitted when required.

Common Misconceptions About QFZP

• Misconception 1 All Freezone companies automatically qualify for 0 percent corporate tax

  • Reality Only businesses that meet the QFZP conditions enjoy the 0 percent rate. Others may be subject to 9 percent.

• Misconception 2 Companies with Mainland income can still be 0 percent

  • Reality If a Freezone company earns income from non qualifying activities or deals directly with Mainland customers without conditions, that income may be taxed at 9 percent.

• Misconception 3 Small companies do not need to comply with QFZP rules

  • Reality All Freezone companies must register for Corporate Tax and file returns even if they expect 0 percent tax.

Case Study Freezone IT Services Company

A Freezone based IT services company provides software development to clients in Europe and consultancy services to a Mainland business in Dubai.

• Export income from Europe qualifies for 0 percent tax under QFZP rules.
   

• Mainland consultancy income is subject to 9 percent corporate tax.
   

• Because the company maintains an office and staff in the Freezone, keeps audited accounts, and complies with transfer pricing, it qualifies as a QFZP. However, only its export income remains at 0 percent, while Mainland income is taxed.
   

This shows that being a Freezone business does not mean all income is automatically tax free. Proper classification and accounting are necessary.

Why Consultancy is Important

The QFZP rules are detailed and require careful review of your company’s activities, contracts, and financial structure. Errors in classification may lead to penalties and loss of QFZP benefits. Working with professionals ensures compliance and maximizes tax savings.

How Bookkeeping Expert Can Help

• Corporate Tax registration and compliance for Freezone companies

• Detailed QFZP eligibility assessment and advisory

• Preparation of audited financial statements

• VAT registration and filing

• Outsourced bookkeeping and payroll services

• Affordable packages starting from AED 350 per return
   

With more than 17 years of experience in UAE accounting and tax services, Bookkeeping Expert ensures that your Freezone company remains compliant and takes full advantage of available tax benefits.

Final Thoughts

Not every Freezone company in the UAE automatically qualifies as a Qualified Freezone Person. Eligibility depends on meeting specific conditions related to substance, type of income, and compliance. Businesses must carefully assess their situation to avoid penalties and ensure they receive the 0 percent corporate tax benefit where applicable.

Contact Bookkeeping Expert today for consultancy and complete accounting and tax services to determine whether your business is eligible for QFZP status.

Disclaimer

The information in this blog is based on UAE Corporate Tax Law and FTA guidance available at the time of publication. Rules and requirements may change by government order. Please verify the latest information on the Federal Tax Authority website or consult a licensed tax advisor before making compliance decisions.