Eligibility opinion
Detailed review of Free Zone status, adequate substance, qualifying activities, excluded activities, audited accounts, transfer pricing and tax elections.
QFZP and qualifying income advisory
Qualifying Income and QFZP Advisory for UAE Free Zone Companies
Qualifying income is not determined by a single percentage or customer label. It requires a transaction level review of activity, customer status, substance, excluded income and the current Free Zone Corporate Tax decisions.
Partner led advice · UAE focused analysis · Review ready records
Structure specific support
Qualifying income must be designed into the records
The UAE Free Zone Corporate Tax regime can apply a zero percent rate to qualifying income earned by a Qualifying Free Zone Person. The company must maintain adequate substance, derive qualifying income, comply with transfer pricing, prepare the required financial statements and avoid an election into the standard regime. It must also remain within the de minimis rules for non qualifying revenue.
The list and scope of qualifying activities and excluded activities are defined by Cabinet and Ministerial Decisions and can change. The 2025 decisions expanded and clarified certain areas including qualifying commodity trading, treasury and financing activities and distribution in or from a Designated Zone. CBMC converts these rules into a practical income classification, evidence and monitoring framework.
This page is relevant for
- Free Zone companies claiming or considering QFZP status
- Manufacturing, processing, logistics and distribution businesses
- Holding, headquarters, treasury and related party service companies
- Fund, wealth, reinsurance, ship and aircraft related structures subject to the detailed conditions
- Businesses with mixed Free Zone, mainland, overseas and natural person customers
Services for this structure
End to end QFZP support
We test the legal conditions, classify the income and establish a monthly control process before the annual return is prepared.
Qualifying income matrix
Transaction categories are mapped by activity, counterparty, location, permanent establishment, property and intellectual property treatment.
De minimis monitoring
Monthly or quarterly calculation of total and non qualifying revenue with early warning when the statutory threshold is at risk.
Substance assessment
Review of employees, premises, assets, expenditure, outsourcing, supervision and core income generating activity in the UAE.
Transfer pricing file
Related party agreements, functional analysis, pricing support, allocation methods and documentation aligned to the actual conduct.
Return and audit support
Audited financial statement coordination, Corporate Tax schedules, qualifying income disclosures and review of evidence before filing.
UAE considerations
Five areas decide whether the regime is available
A company should not wait until the tax return to test these conditions. A late classification can reveal a breach after it can no longer be corrected.
Qualifying activity
The income must arise from a qualifying activity or a qualifying transaction with another Free Zone Person, subject to the detailed exclusions and specific rules.
Excluded activity
Certain financial services, transactions with natural persons, immovable property and intellectual property income are excluded or separately treated, subject to statutory exceptions.
Adequate substance
The company must have suitable people, assets, expenditure and operational presence for its core income generating activities in the UAE.
De minimis calculation
Non qualifying revenue must remain within the lower of five percent of total revenue or AED 5 million after applying the detailed inclusions and exclusions.
Audited financial statements
A QFZP must prepare and maintain audited financial statements in accordance with the applicable Corporate Tax decisions and accounting requirements.
Five year consequence
Failure to meet a qualifying condition can lead to loss of QFZP status for the relevant period and a further minimum period specified by law.
Information we organise
Build the QFZP evidence file before year end
Every material conclusion should link to the accounting code, contract, invoice, customer status and operational evidence.
Free Zone incorporation, licence, lease and confirmation of the qualifying geographic area
Detailed activity description compared with the current qualifying and excluded activity decisions
Customer and supplier classification with Free Zone, mainland, overseas and natural person evidence
Employee, premises, asset, expenditure, outsourcing and supervision records supporting substance
Revenue ledger segmented between qualifying, non qualifying and separately taxable categories
Related party agreements, transfer pricing support, audited accounts and Corporate Tax working papers
How we work
A controlled process with clear ownership
Every stage has a defined purpose, required information, review point and practical output.
Legal conditions review
We confirm the entity, location, licence, elections, audit requirement and eligibility conditions.
Income classification
Each material revenue stream is mapped to the activity, customer, source and exclusion rules.
Monitoring controls
Coding, customer evidence, de minimis calculations and substance measures are monitored through the year.
Annual conclusion
The audit, financial statements, tax schedules and evidence are reviewed together before the return is submitted.
Engagement output
A clear conclusion supported by working papers
Management receives the technical assessment and the operating controls required to maintain the conclusion.
QFZP eligibility memorandum and action list
Qualifying income and excluded activity matrix
De minimis calculation and forecast through year end
Substance assessment with evidence gaps and corrective actions
Transfer pricing, audit and Corporate Tax filing pack
Why CBMC
Partner led work with one accountable standard
Tax, accounting, audit and finance work are coordinated around one reconciled source of information.
Partner led accountability
A named senior contact coordinates the engagement and remains responsible for quality, communication and deadlines.
UAE specific analysis
Advice reflects the licence, legal form, Emirate, Free Zone status, activities, ownership and transaction flows.
Review ready records
Reconciliations, calculations, working papers and supporting evidence are organised for professional review.
Commercially useful reporting
Technical requirements are translated into decisions, priorities, responsibilities and practical next steps.
Frequently asked questions
Questions businesses ask before engaging us
These answers provide general guidance. The correct treatment depends on current legislation and the facts of the structure.
What is qualifying income for a Free Zone company
Qualifying income is income that falls within the categories specified by the current Cabinet Decision and arises under the relevant qualifying activity and transaction rules, after considering exclusions and separate treatment.
What is the de minimis limit
Non qualifying revenue must generally not exceed the lower of five percent of total revenue or AED 5 million. Detailed rules determine which revenue is included or excluded from the calculation.
What are the main qualifying activities
The decisions include activities such as manufacturing, processing, holding shares and securities, certain ship, reinsurance, fund, wealth, headquarters, treasury, aircraft, logistics, commodity and Designated Zone distribution activities, subject to detailed conditions.
Can income from natural persons qualify
Transactions with natural persons are generally an excluded activity, subject to specific exceptions in the legislation. Each revenue stream should be tested individually.
Can QFZP status be decided after the year end
The final conclusion is made for the tax period, but the conditions should be monitored during the year. Waiting until filing can leave no time to correct substance, documentation or de minimis risks.
Start the conversation
Test the qualifying income position before the deadline
Our Dubai team will map the revenue streams, identify any excluded activity and show what evidence is needed to support QFZP status.
Important note UAE tax and regulatory treatment depends on the current law, implementing decisions, official guidance and the facts of each case. This page is general information and is not a substitute for a written professional opinion.
Content framework reviewed against official publications of the UAE Ministry of Finance and Federal Tax Authority.