UAE Federal Tax Authority Issues Clarification TAXP010 on Corporate Tax Designated Zones

The UAE Federal Tax Authority (FTA) has issued Public Clarification TAXP010, titled 'Free Zones and Designated Zones for Tax Purposes', according to analysis published by Willow Tax & Legal in International Tax Review. The guidance was published on 2 October 2026.

The clarification examines the precise geographic areas that qualify as Designated Zones under the UAE Corporate Tax regime. This determination directly influences the tax classification of qualifying distribution activities carried out by free zone businesses.

Under the UAE Corporate Tax framework, entities operating within these zones must fulfill specific statutory requirements and zone conditions to retain eligibility for the preferential 0% corporate tax rate. The clarification advises corporate groups to examine and align their distribution and trading structures to maintain qualifying income status.