It depends - free zone companies can maintain a 0% Corporate Tax rate on qualifying income, but only if they meet specific conditions, including a de minimis test on the proportion of non-qualifying income they generate. It isn't automatic simply from being registered in a free zone. Income that doesn't meet the qualifying criteria, or a free zone entity that fails the de minimis test, becomes subject to standard Corporate Tax rules like any other UAE business.
Check your own exact figures with the UAE Corporate Tax Calculator - free, in under a minute, no sign-up required.
Frequently Asked Questions
What counts as 'qualifying income' for a free zone company?
Specific criteria define qualifying income under current Corporate Tax rules - check current guidance for exactly what activities and income types qualify.
What is the de minimis test?
It's a threshold on how much non-qualifying income a free zone entity can generate while still maintaining its 0% qualifying status - exceeding it can affect the entity's overall tax treatment.
Does every free zone offer the same tax treatment?
The Corporate Tax qualifying free zone framework applies based on meeting the criteria, generally consistent in principle across recognized free zones, though specific circumstances can vary.
Can a free zone company lose its 0% status?
Yes - failing to meet qualifying income or de minimis conditions can result in standard Corporate Tax rates applying instead.
How can I check my free zone company's specific tax position?
Use the tax assistant or corporate tax calculator, and confirm with a qualified UAE tax advisor for anything with filing consequences.