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New UAE Corporate Tax Requirements for Free Zone Companies
Rana Aamir Saeed
Financial Specialist at My Business Consulting
The UAE Corporate Tax framework continues to evolve, with increasing focus on transparency, documentation, and demonstrating genuine business activity.
While eligible Free Zone companies can benefit from the 0% Corporate Tax regime on qualifying income, maintaining this advantage requires businesses to meet all relevant conditions and maintain proper supporting records.
One of the latest developments is FTA Decision No. 6 of 2026, introducing additional compliance procedures for Qualifying Free Zone Persons (QFZPs) engaged in the distribution of goods or materials in or from a Designated Zone. The requirements apply to tax periods starting on or after 1 January 2026 and aim to strengthen verification of qualifying activities.
Who Is Affected by the New FTA Requirements?
It is important to understand that this decision does not apply to every Free Zone company in the UAE.
The additional procedures specifically apply to Qualifying Free Zone Persons carrying out the qualifying activity of distribution of goods or materials in or from a Designated Zone.
These requirements are particularly relevant for companies involved in:
Distribution and wholesale activities
Import and redistribution of goods
Trading structures using UAE Free Zones as logistics and distribution hubs
Businesses supplying goods to customers who resell or further process those goods
For these companies, maintaining eligibility for the UAE’s 0% Corporate Tax regime requires stronger evidence that their activities meet the required conditions.
What Has Changed Under FTA Decision No. 6 of 2026?
The main change introduced by the FTA is the requirement for eligible QFZPs to obtain an Agreed-Upon Procedures (AUP) Report from an independent external auditor.
The report must be prepared in accordance with the International Standard on Related Services (ISRS) 4400 – Agreed-Upon Procedures Engagements and must document the procedures performed and factual findings identified by the auditor.
Unlike a traditional audit opinion, an AUP engagement focuses on verifying specific facts and compliance criteria requested by the relevant authority.
In practical terms, the auditor will review whether:
Customers purchasing goods are genuine resellers or businesses processing goods for resale;
Imported goods entered the UAE through a recognised Designated Zone;
The company maintains sufficient documentation supporting its Corporate Tax position.
Verification of Customer Reseller Status
One of the key objectives of the new procedures is confirming that customers purchasing goods from a QFZP are genuinely involved in resale or onward supply activities.
To support this requirement, businesses should maintain appropriate documentation demonstrating the commercial nature of their transactions.
The FTA specifically identifies documents that may include:
Signed customer declarations confirming that goods are acquired for resale, onward supply, or qualifying purposes;
Sales agreements, invoices, purchase orders, and other transaction records demonstrating resale activity.
During the auditor’s review, sample transactions may be selected, with attention given to customers and transactions with higher distribution values.
For businesses, this means that customer due diligence and documentation management are becoming increasingly important parts of maintaining tax compliance.
Import Documentation and Designated Zone Requirements
For companies importing goods into the UAE, the FTA has also introduced additional verification procedures related to Designated Zone imports.
Businesses should be prepared to demonstrate that goods entering the UAE were imported through a Designated Zone by maintaining supporting records such as:
Import declarations;
Customs clearance documents;
Shipping documents, including bills of lading or airway bills;
Warehouse records;
Inventory movement documentation;
Logistics records confirming the handling and storage of goods.
The auditor may also verify that the relevant Free Zone, port, or area qualifies as a recognised Designated Zone under UAE legislation.
When Must the AUP Report Be Submitted?
The required Agreed-Upon Procedures Report must be submitted to the Federal Tax Authority:
Within 30 days after the deadline for filing the Corporate Tax return for the relevant tax period, unless another deadline is specified by the FTA.
Failure to submit the required report may mean that the relevant conditions for benefiting from the applicable QFZP Corporate Tax treatment are considered not fulfilled.
This makes early preparation essential. Businesses should not wait until the Corporate Tax filing period to begin collecting documents or engaging auditors.
How My Business Consulting Can Help
The latest FTA requirements highlight the importance of proactive Corporate Tax compliance and accurate documentation.
At My Business Consulting, we help UAE businesses navigate evolving tax obligations through:
QFZP eligibility assessment
Corporate Tax compliance support
Documentation review and readiness checks
Coordination with auditors for AUP reporting
Whether you operate a Free Zone company or are reviewing your current structure, our specialists can help ensure your business remains compliant and prepared for the UAE’s changing regulatory environment.
Contact My Business Consulting today to discuss your Corporate Tax requirements.
