The UAE Federal Tax Authority (FTA) has published a Basic Tax Information Bulletin, regarding the regulations for Free Zone Persons under the UAE Corporate Tax Law.

The Corporate Tax Law permits a Qualifying Free Zone Person to benefit from a 0% Corporate Tax rate on their Qualifying Income. However, any other income that does not qualify is subject to the standard Corporate Tax rate of 9%.

A Free Zone Person is a juridical person that is incorporated, established, or otherwise registered in a Free Zone. This also includes the relevant Free Zone authorities and other Government Controlled Entities that are established in a Free Zone.

A Qualifying Free Zone Person that elects to be subject to the standard Corporate Tax rules and rates or that fails to meet any of the conditions to be a Qualifying Free Zone Person will cease to be a Qualifying Free Zone Person from the beginning of the Tax Period for which it elects to be subject to the standard Corporate Tax rules and rates or in which it fails to meet the conditions to be a Qualifying Free Zone Person, and the four subsequent Tax Periods.

A Free Zone for Corporate Tax purposes is a designated and defined geographic area within the UAE that is specified in a decision issued by the Cabinet at the suggestion of the Minister. A Designated Zone for Corporate Tax purposes is a designated zone according to what is stated in Federal Decree-Law No. 8 of 2017 on Valued Added Tax, and which has been included as a Free Zone in accordance with the Corporate Tax Law.

All Taxable Persons should check with their respective Free Zone Authority to confirm if they operate in a Free Zone or Designated Zone for Corporate Tax purposes.