Qualifying Free Zone Person Advisory Services
QFZP Status Is Not Granted. It Is Earned Every Single Tax Period.
A Qualifying Free Zone Person pays Corporate Tax at the qualifying rate on eligible income. But this is not a permanent status. Your company must meet every condition under Article 18 of Federal Decree-Law No. 47 of 2022 and Ministerial Decision No. 265 of 2023 for each tax period. Fail one condition and you lose the status, potentially with retroactive consequences. Jazaa reviews your QFZP position regularly and flags risks as they emerge.
What It Takes to Qualify as a QFZP
The conditions for QFZP status are cumulative. You must satisfy all of them simultaneously.
Qualifying Income
Your income must derive from qualifying activities as defined in Ministerial Decision No. 265 of 2023. These include transactions with other free zone persons, income from qualifying intellectual property, and certain other specified activities. Income from transactions with mainland persons or from excluded activities does not qualify.
Adequate Substance
You must maintain adequate substance in the UAE relative to the activities you perform. This means having qualified employees, incurring operating expenditures, and maintaining physical presence proportionate to your business.
De Minimis Revenue Test
Revenue from non-qualifying activities must stay below the de minimis threshold to avoid disqualification. If your non-qualifying revenue exceeds this limit, your entire income may lose QFZP treatment.
Transfer Pricing Compliance
All transactions with related parties must comply with the arm’s length principle, and you must maintain transfer pricing documentation that supports your pricing.
Why Free Zone Companies Choose Jazaa for QFZP
Every condition assessed against your actual operations
Income classification reviewed to separate qualifying from non-qualifying
Substance requirements verified and documented
How Jazaa Protects Your QFZP Status
- 1
Full Status Assessment
We review your current operations, income sources, substance, and related party transactions against every QFZP condition.
- 2
Income Classification
We classify each revenue stream as qualifying or non-qualifying and calculate your non-qualifying revenue ratio against the de minimis threshold.
- 3
Substance Documentation
We document your UAE substance including headcount, office presence, operating expenditures, and decision-making activities to support your QFZP claim.
- 4
Ongoing Monitoring
Each quarter, we review changes in your business that could affect QFZP status. New clients, new revenue streams, staffing changes, and related party transactions all get assessed.
Everything Included in Your QFZP Advisory Engagement
- Full QFZP eligibility assessment against all conditions
- Revenue stream classification as qualifying or non-qualifying
- De minimis threshold monitoring and alerting
- Substance requirement documentation
- Transfer pricing review for related party transactions
- Quarterly status review meetings
- Annual QFZP position report for your CT return
- Risk alerts when business changes threaten qualification
Common Questions
About QFZP Status
Your income becomes subject to the standard Corporate Tax rate. Depending on the circumstances, this may apply retroactively to the beginning of the current tax period and could affect subsequent periods.
Yes. The qualifying rate applies only to qualifying income. Non-qualifying income is taxed at the standard rate. The key risk is exceeding the de minimis threshold for non-qualifying revenue.
No. There is no application process. You self-assess whether you meet the conditions and treat your income accordingly in your CT return. The FTA can challenge your position during an audit.
It depends on the nature of the services and who the clients are. Services provided to other free zone persons may qualify. Services to mainland businesses generally do not.
Non-compliance with transfer pricing rules for related party transactions can disqualify your QFZP status entirely. Documentation is not optional.
Get In Touch
contact@jazaa.com
LOCATION
Dubai, UAE with clients across all Emirates
Meeting
Book a consultation to discuss your specific financial needs
