How to Qualify for UAE QFZP Status — Qualifying Free Zone Person 2026 Guide
UAE Qualifying Free Zone Person (QFZP) status enables free zone companies to pay 0% Corporate Tax on qualifying income. Here is the complete 2026 guide on how to qualify.
In this guide:
What Is QFZP?
- Qualifying Free Zone Person: A free zone company that meets all QFZP conditions and elects QFZP status
- Benefit: 0% CT on qualifying income (vs. 9% standard rate)
- Election: Opt in via CT return; must meet all conditions in each period
QFZP Conditions You Must Meet
- Maintain qualifying income: Most income must be from qualifying sources (qualifying activities and counterparties)
- De minimis threshold: Non-qualifying income must not exceed AED 5 million OR 5% of total revenue (whichever is lower)
- Adequate substance: Must have adequate UAE employees, UAE assets, and core income-generating activities performed in UAE
- Audited financials: Must prepare audited financial statements (if revenue above certain threshold)
- Transfer pricing: Transactions with related parties must be at arm length
What Is Qualifying Income?
- Transactions with other free zone persons: Income from sales to other UAE free zone companies
- Transactions with non-UAE persons: Income from non-UAE customers
- Qualifying activities: Trading, manufacturing, fund management, ship operation, aircraft operation, reinsurance, certain financial services
What Is NOT Qualifying Income (Non-Qualifying)
- UAE mainland retail sales: Selling to UAE mainland consumers or businesses (in most cases)
- Certain excluded activities: UAE real estate, commercial/retail banking to UAE customers, certain financial services
How to Elect QFZP Status
- Step 1: Prepare audited financial statements for the tax period
- Step 2: Review qualifying income vs. total income; confirm you meet the de minimis test
- Step 3: File CT return on EmaraTax; elect QFZP status in the return
- Step 4: Pay 0% CT on qualifying income; 9% on non-qualifying income