The Free Zone Advantage

Historically, UAE Free Zones offered a 0% tax environment. With the introduction of the new Corporate Tax regime, the landscape has become more nuanced.

Mainland Companies

Mainland businesses are subject to the standard 9% tax on net profits exceeding AED 375,000. They can conduct business anywhere in the UAE without restriction.

Free Zone Persons and "Qualifying Income"

Free Zone companies can still benefit from a 0% Corporate Tax rate, provided they derive "Qualifying Income."

What is Qualifying Income?

- Income from transactions with other Free Zone Persons.

- Income from certain "Qualifying Activities" (e.g., manufacturing, holding shares, logistics) conducted with non-Free Zone persons.

*Note:* If a Free Zone company earns non-qualifying income that exceeds the de minimis requirement (the lower of 5% of total revenue or AED 5 million), it loses its 0% status for that entire year and pays 9% on all income.

Record Keeping is Critical

To prove your income is "Qualifying," your bookkeeping must be impeccable. You must clearly segregate revenue streams. This is where a robust accounting system like Ledgerly becomes indispensable for Free Zone entities.