UAE Issues FTA Decision No. 6 on 0% Corporate Tax for Free Zones

The UAE Federal Tax Authority (FTA) issued FTA Decision No. 6 of 2026 on June 2, 2026, establishing compliance requirements for Qualifying Free Zone Persons (QFZPs) engaged in distribution activities in or from a Designated Zone. To maintain eligibility for the 0% Corporate Tax rate, affected entities must secure an annual Independent Agreed-Upon Procedures (AUP) report prepared by an independent external auditor.

The requirement takes effect for tax periods commencing on or after January 1, 2026. The AUP report must follow ISRS 4400 standards using a value-weighted sampling approach with a 10% margin of error, focusing primarily on high-value transactions. Companies must submit the final AUP report to the FTA no later than 30 days after filing their Corporate Tax return. Failure to complete these steps may lead to qualifying income being treated as non-qualifying, subjecting it to the standard 9% Corporate Tax rate.

Under the decision, auditors must verify two primary operational conditions. First, the auditor must confirm that customers are genuine resellers or entities that process goods for resale, evidenced by commercial licenses, signed declarations, contracts, and invoices. Second, the auditor must verify that imported goods entered through a Designated Zone prior to distribution, using customs declarations, shipping documents, and warehouse records.