The UAE has clarified how the 0% corporate tax applies to Free Zone companies, outlining qualifying income and compliance requirements. The update enhances transparency, protects investors, and reinforces the nation’s position as a globally trusted and competitive hub for trade and investment.
The UAE Ministry of Finance has issued new cabinet and ministerial decisions providing detailed clarification on how the 0% corporate tax regime applies to companies registered within the country’s free zones. The updates, part of the government’s ongoing efforts to enhance regulatory transparency, define the qualifying income, substance requirements, and compliance conditions for entities seeking to maintain their tax-free status.
The decisions outline clear guidelines on operational substance, revenue categorization, and related-party transactions, helping businesses operate confidently within the UAE’s evolving tax environment. Free Zone companies engaged in qualifying activities — such as manufacturing, re-export, logistics, or R&D — will continue to enjoy the 0% rate, provided they meet the updated compliance standards.
This clarification is particularly significant for the UAE’s free zones, which collectively serve as the backbone of the nation’s trade and investment ecosystem. It ensures consistency, investor protection, and fair competition while aligning with international tax norms.
By reinforcing its reputation as a transparent and cooperative jurisdiction, the UAE continues to attract global investors seeking both opportunity and regulatory certainty.
The new rules strengthen the country’s economic framework, ensuring sustainable growth for Free Zone businesses across all Emirates.
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