Previous Decisions regarding UAE Free Zones Updated - Firstbit Blog
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Previous Decisions regarding UAE Free Zones Updated

Previous Decisions regarding UAE Free Zones Updated

Published 22 Dec 2023
Due to previous Decisions being narrowly constructed and many things being changed, the Ministerial replaced old versions with new ones. The Decisions will impact:
  • The issue of determining Qualifying Income (QI) for the Qualifying Free Zone Person (QFZP).
  • The issue regarding Qualifying Activities (QA) and Excluded Activities (EA).
A Qualifying Free Zone Person (QFZP) in the UAE is a juridical person that is incorporated, established, or otherwise registered in a Free Zone. To be considered a QFZP and avail a preferential 0% Corporate Tax (CT) rate on their Qualifying Income, the entity must meet specific conditions, including:
  1. Maintaining adequate substance in the Free Zone
  2. Deriving Qualifying Income
  3. Not having elected to be subject to CT
  4. Complying with the Arm's Length Principle and Transfer Pricing documentation
  5. Ensuring non-qualifying revenues do not exceed the de minimis requirements
  6. Preparing audited Financial Statements in accordance with the law
  7. Meeting any other conditions that may be prescribed by the Minister

The Ministerial Decision No. 139 of 2023 Regarding Qualifying Activities and Excluded Activities specifies the following:
  • Holding of shares and other securities with investment purposes. Investment purposes refers to holding securities continuously for a year.
  • Fund management services including the activity of portfolio management, risk management and other.
  • Wealth and investment management services that are defined to include the activities of providing discretionary and non-discretionary investment management, advisory services and other.
  • Headquarter services to Related Parties. This is explained as including the administration, supervision and management of related parties' business activities, including the provision of senior and general management services. 
  • Treasury and financing services to Related Parties providing financing services to Related Parties encompasses offering cash and liquidity management, financing, debt management, financial risk management, and other related services.
  • Distribution of goods or materials in or from a Designated Zone. It refers to the physical trading of qualifying goods and related trading in derivative instruments. Trading in goods must be conducted on a commodity exchange. This activity can be carried out in any designated Free Zone approved for CT, not limited to specific zones.
  • Logistics services, now part of Qualifying Activities, cover storing and transporting goods for someone else without owning them. This includes cargo handling, warehousing, transport agency services, and more.


The Ministerial Decision No. 139 of 2023 Regarding Qualifying Activities and Excluded Activities specifies the following Excluded Activities:
  • Transaction with natural persons (with exceptions)
  • Regulated banking activities
  • Regulated finance and leasing activities involve providing money or financing in exchange for something of value and allowing others to use an asset in return for payment, whether through a finance lease, operating lease, or similar arrangement. These activities are regulated by the Competent Authority in the State.
  • Ownership or exploitation of Immovable Property, other than Commercial Property located in a Free Zone
  • Ownership or exploitation of intellectual property assets

You can see the full updated list in the official decision by the UAE Ministry of Finance.

The new rules have significantly clarified details related to Qualifying and Excluded Activities. With the updated decisions, companies should carefully evaluate whether they are compliant with the list of activities and whether all activities are consistent with licenses, service agreements and other documentation.

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Content Writer
Anna has a background in IT companies and has written numerous articles on technology topics. Now, building up her expertise in construction and legal regulations, Anna expands the horizons of our blog and delights her readers with insightful articles.
Editor-in-Chief at First Bit
Alina is a journalist and editor with over five years of experience in content marketing. Staying mosly behing the scenes, she sometimes reports First Bit events and comes up with expert publications.
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