In the UAE, corporate tax regulations for Free Zone businesses have introduced significant changes, especially with the release of Ministerial Decision No. 139 of 2023. These rules categorize business activities into two types: Qualifying Activities, which benefit from a 0% corporate tax rate, and Excluded Activities, which are taxed at the standard rate of 9%.
This article covers the core aspects of Qualifying and Excluded Activities in UAE Corporate Tax for Free Zone businesses. Now Consultant helps you maximize tax benefits and ensure compliance with UAE corporate tax regulations.
What Are Qualifying Activities and Excluded Activities?
Having proper understanding of the difference between qualifying and excluded activities is important for businesses in Free Zones, as it directly impacts their tax obligations.
Qualifying Activities:
Qualifying activities refer to those business activities eligible for the 0% corporate tax rate within UAE Free Zones. These activities align with the UAE government’s goal to improve economic growth in sectors such as manufacturing, trading, logistics, and services. The rules ensure that only specific activities that contribute to the UAE’s economy can benefit from the corporate tax exemptions.
Excluded Activities:
Excluded activities are those that do not qualify for tax exemptions. Businesses involved in excluded activities, such as financial services provided to UAE mainland clients, have their income taxed at the standard corporate tax rate of 9%.
List of Qualifying Activities For a Qualifying Free Zone Person
To be considered a qualifying Free Zone person, companies must engage in activities that are recognized as qualifying by the FTA. These activities are designed to support the strategic economic priorities of the UAE, particularly in its Free Zones.
List of Qualifying Activities
Below is a list of common qualifying activities according to the Ministerial Decision No. 139 of 2023:
| Category | Qualifying Activities |
| Manufacturing | Production and assembly of goods, materials, and products for export or sale to non-UAE markets. |
| Trading | Import, export, and re-export of goods and services to markets outside the UAE. |
| Warehousing & Logistics | Storage and transportation of goods, supply chain management, and logistics services for non-UAE clients. |
| Professional Services | Providing consulting, legal, and auditing services to non-UAE customers, provided these are performed within the zone. |
| Holding Company Activities | Holding and managing investments and assets, including equity stakes in non-UAE entities. |
| Financial Services | Certain investment management and fund administration services are offered to foreign clients. |
| Technology and Innovation | Development of innovative technologies, research and development, software engineering, and data processing services. |
| Media and Creative Industries | Film production, digital content creation, and other media-related activities catering to international markets. |
This table represents the most common activities that qualify for the 0% corporate tax rate within UAE Free Zones.
List of Excluded Activities:
Here is the list of excluded activities of UAE corporate tax according to Cabinet Decision No. 55 of 2023:
| Category | Excluded Activities |
| Transactions with Natural Persons | Any transactions with natural persons, except those related to specified qualifying activities. |
| Banking Activities | Banking activities are subject to regulatory oversight by the competent authority in the UAE. |
| Insurance Activities | Insurance activities are subject to regulatory oversight by the competent authority in the UAE. |
| Finance and Leasing Activities | Finance and leasing activities that are subject to regulatory oversight by the competent authority in the UAE. |
| Ownership of Immovable Property | Ownership or exploitation of immovable property, except for commercial property located in a Free Zone where the transaction involves other Free Zone persons. |
| Intellectual Property | Ownership or exploitation of intellectual property assets. |
How Can We Help You?
With the exact knowledge about the qualifying activities, your business can get the benefit of 0% corporate tax in the Free Zone. Now Consultants help your business to get benefits from qualifying activities in UAE corporate tax, following updated FTA regulations.
Our experts provide specialized support in understanding and applying UAE corporate tax regulations to identify the possible opportunities to cut down on tax costs and grow your business in the UAE.
