UAE Corporate Tax — Which Free Zone Activities Qualify for 0% Rate 2026
UAE Corporate Tax allows Qualifying Free Zone Persons (QFZP) to benefit from a 0% CT rate on qualifying income. Here is the definitive 2026 guide on which activities qualify.
In this guide:
Qualifying Income (0% CT Rate)
- Transactions with other free zone persons: Income from selling to / providing services to other UAE free zone companies (with some exceptions)
- Income from foreign sources: Business income derived from outside UAE that does not constitute non-qualifying income
- Qualifying intellectual property income: Royalties and income from qualifying IP held in free zone
- Regulated financial services: Income from regulated financial services; subject to specific rules
Non-Qualifying Income (Subject to 9% CT)
- Income from UAE mainland persons: Providing services to or selling goods to UAE mainland customers
- Real estate income (generally): Except for commercial property transactions
- Excluded activities income: See below
Excluded Activities (Cannot Be QFZP)
- Transactions with natural persons (individual consumers): If material portion of income from B2C
- UAE mainland banking and insurance: Certain regulated financial services to mainland
- Ownership of UAE immovable property for residential purposes
De Minimis Test
- Non-qualifying income threshold: Non-qualifying income must not exceed 5% of total revenue OR AED 5 million, whichever is less
- Breach: If de minimis threshold is exceeded, entire year is taxable at 9% (not just the excess)
Practical Advice
- B2B only: For 0% CT to work, focus on B2B sales to non-UAE or to other free zones; avoid significant UAE mainland B2C
- UAE CT adviser: Consult UAE CT adviser before relying on 0% QFZP rate