Al Bayan, 27 May 2024: The Federal Tax Authority (FTA) has issued a guide outlining the application of Corporate Tax to Free Zone Persons.

These guidelines align with the Free Zone Corporate Tax regime, which enables Qualifying Free Zone Persons to benefit from a 0% Corporate Tax rate on Qualifying Income.

The guide provides general guidance on the application of the Corporate Tax Law to Free Zone Persons.

It provides an overview of the conditions required to be met for a Free Zone Person to be a Qualifying Free Zone Person and benefit from the 0% Corporate Tax rate and the activities that are considered Qualifying Activities and Excluded Activities for a Qualifying Free Zone Person.

The guide includes many examples to assist Businesses with understanding how the key elements of the Corporate Tax Law apply to Free Zone Persons.

The guide also covers Corporate Tax calculation for Free Zone Persons, Qualifying Income determination, taxable income subject to 9% rate.

It outlines substance requirements for Qualifying Free Zone Persons, criteria for Foreign or Domestic Permanent Establishments.

The guidelines clarifies the treatment of income from immovable property and Qualifying Intellectual Property, details Qualifying and Excluded Activities and compliance requirements.

The FTA has added that where a Qualifying Free Zone Person operates through a Permanent Establishment in the UAE (outside the Free Zones) or in a foreign country, the profits attributable to such Permanent Establishment will be subject to the 9% Corporate Tax rate.

All Free Zone Persons are urged to thoroughly read the guide, comprehending definitions and interactions of various rules.

Corporate Tax implementing decisions and guides, including the new Free Zone Persons guide, are available on the FTA’s website.

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