Free zone businesses are taxable persons for corporate tax. A Qualifying Free Zone Person is charged 0% on its Qualifying Income and 9% on taxable income that is not Qualifying Income. Being in a free zone does not, by itself, make income qualifying.
Chart data
| Who and on what | Rate |
|---|---|
| Qualifying Free Zone Person, Qualifying Income | 0% |
| Qualifying Free Zone Person, other taxable income | 9% |
| Mainland, first AED 375,000 | 0% |
| Mainland, above AED 375,000 | 9% |
Two conditions people collapse into one
There is a status test and an income test, and they are separate. First, whether the business is a Qualifying Free Zone Person at all: that depends on conditions set in the law and the decisions under it. Second, whether a given stream of income is Qualifying Income. Losing the status affects everything; earning some non-qualifying income affects that income. Owners routinely assume the first and ignore the second.
What we will not guess
Which activities produce Qualifying Income, and the de minimis allowance for non-qualifying revenue, are set out in Cabinet and ministerial decisions. We could not verify the current text of those decisions from an official source on 12 September 2026, so this guide does not list activities or thresholds. You will find pages elsewhere that do, often confidently, sometimes quoting figures from an earlier version of the rules. On a question where being wrong costs 9% of a revenue stream, a gap is the honest answer.
What is officially published: the FTA has issued FTA Decision No. 6 of 2026, which sets additional compliance procedures for Qualifying Free Zone Persons. If you hold the status, that decision and the FTA's free zone guidance are the documents to read, or to have a registered tax agent read with your contracts in hand.
The practical shape of it
A design studio licensed in a Dubai free zone that invoices clients abroad is in a very different position from the same studio invoicing a mainland retailer down the road. The second stream is the one to examine before the year end, not after it. The same goes for a trading company that starts selling into the local market because a customer asked, and never reconsiders its tax position.
Small Business Relief is not an alternative
A Qualifying Free Zone Person cannot elect Small Business Relief: the exclusion is explicit, alongside members of multinational groups with consolidated revenue above AED 3.15 billion. So a small free zone company with modest revenue does not have the fallback a mainland company of the same size has. If your qualifying status is doubtful and your revenue is under AED 3,000,000, that trade-off is worth modelling properly before the period ends.
What to do this quarter
- List your revenue streams by customer type and location, not by invoice total.
- Mark the ones you are not certain are qualifying, and total them.
- Take that list, and the decisions above, to a registered tax agent. The question is cheap to ask and expensive to answer late.
- Keep the audit trail. Status conditions are tested on evidence, not intention.
For the mainland arithmetic, the corporate tax calculator applies the standard bands. It does not model free zone status, for the reasons above.