Tax Consulting for Free Zone Compliance
Free Zones Are Not Tax-Free Anymore. Make Sure Your Setup Survives FTA Scrutiny.
The UAE’s tax landscape has changed. Corporate Tax applies to free zone companies. VAT rules treat designated and non-designated zones differently. And the Qualifying Free Zone Person (QFZP) status that keeps your rate at the lowest available bracket requires meeting specific conditions every single year. Jazaa’s tax consulting keeps your free zone company compliant and positions you to take advantage of every available benefit.
Free Zone Tax Rules Have Changed
The assumption that free zones mean zero tax is outdated. Since the introduction of Corporate Tax under Federal Decree-Law No. 47 of 2022, every business in the UAE falls under the regime. Free zone companies are not exempt. They qualify for the lowest rate only if they meet the conditions for Qualifying Free Zone Person status.
QFZP Conditions
Your income must come from qualifying activities as defined in Ministerial Decision No. 265 of 2023. You must maintain adequate substance in the UAE. You must comply with transfer pricing rules on related party transactions. Get any of this wrong, and your company loses QFZP status.
VAT Complexity
On the VAT side, rules depend on whether you operate in a designated zone or a non-designated zone. Goods moving between designated zones can be outside the scope of VAT, but only if conditions under the GCC Common Customs Law are met. Services from free zone companies to mainland clients are always subject to the standard VAT rate under Federal Decree-Law No. 8 of 2017.
Why Free Zone Companies Choose Jazaa for Tax
QFZP status assessment and maintenance
VAT compliance for designated and non-designated zones
FTA-ready record keeping and filing support
Free Zone-Specific Guidance
DMCC Companies
DMCC is a designated zone for VAT purposes. Goods transactions between DMCC companies and other designated zones can fall outside the scope of VAT, provided customs suspension rules are followed.
DIFC Companies
DIFC has its own regulatory framework but falls under the same UAE Corporate Tax and VAT regimes. Income classification for QFZP purposes requires careful attention.
JAFZA Companies
JAFZA operates as a customs-authority-controlled designated zone. VAT treatment follows designated zone rules. Corporate Tax QFZP status depends on income source classification.
ADGM Companies
Similar to DIFC, ADGM companies are subject to UAE-wide tax rules. Transfer pricing documentation is particularly relevant for entities with international parent or sister companies.
What We Cover
Corporate Tax Services
- QFZP status assessment and eligibility review
- Qualifying income vs. non-qualifying income classification
- Transfer pricing documentation for related party transactions
- Arm's length compliance review
- Corporate Tax registration with the FTA
- Annual Corporate Tax return preparation and filing
- Substance requirements review and documentation
VAT Services
- VAT registration guidance
- Designated zone vs. non-designated zone transaction classification
- VAT return preparation and filing
- Input VAT recovery for mixed-supply businesses
- Reverse charge mechanism for imported services
- VAT grouping assessment for multi-entity structures
Ongoing Compliance
- Quarterly compliance review meetings
- FTA audit preparation and response support
- Record keeping standards aligned with FTA requirements
- Penalty avoidance monitoring
The Cost of Getting This Wrong
The FTA does not give warnings. They issue penalties. Late registration, late filing, and errors in returns all carry financial consequences. Beyond penalties, losing QFZP status means paying the standard Corporate Tax rate instead of the qualifying rate. For businesses with meaningful taxable income, that gap is substantial.
Ways to Work With Jazaa on Free Zone Tax
Annual Tax Compliance Package
Covers Corporate Tax and VAT return preparation, filing, QFZP status monitoring, and quarterly review meetings.
Tax Health Check (One-Time)
A full review of your current tax position, QFZP eligibility, VAT classification, and compliance gaps.
Monthly Advisory Retainer
For businesses with complex or changing tax positions.
Common Questions About
Free Zone Tax Compliance
No. Free zone companies can qualify for the lowest rate by meeting QFZP conditions, but this is not automatic.
Your taxable income becomes subject to the standard Corporate Tax rate. This can apply retroactively.
If your taxable supplies exceed the mandatory threshold, VAT registration is required regardless of where your customers are located. Services within free zones are generally subject to the standard rate.
Goods moving between designated zones can be outside the scope of VAT, provided they remain under customs suspension and the recipient is authorized.
Yes. We prepare and file both Corporate Tax returns and VAT returns, and we handle FTA correspondence and audit support.
Get In Touch
contact@jazaa.com
LOCATION
Dubai, UAE with clients across all Emirates
Meeting
Book a consultation to discuss your specific financial needs
