Navigating the New UAE Free Zone Corporate Tax Rules: What Your Business Needs to Know
Big news for businesses operating in UAE free zones!
The Ministry of Finance (MoF) has just rolled out two new ministerial decisions that significantly clarify and expand the corporate tax rules for free zone entities.
As specialists in Accounting and Corporate Tax in Dubai and registered FTA Agents, the team at Zyla Accountants has analysed these updates to bring you the key takeaways. These changes are designed to provide greater clarity, flexibility, and support for the free zones that are vital to the UAE's economy.
Here’s a breakdown of what’s new and what it means for your business:
Key Change 1: Broader Scope for Qualifying Activities
The most significant update is the expansion of what counts as a "qualifying activity" for free zone tax incentives. This means more businesses can potentially benefit from the 0% corporate tax rate on qualifying income.
Expanded Commodity Trading: The list of qualifying commodities has grown. In addition to metals, energy, and agricultural products, it now includes industrial chemicals, environmental commodities, and by-products.
Beyond "Raw Form": Previously, there was ambiguity around the state of traded commodities. The new rules clarify that businesses can trade commodities beyond just their “raw form,” as long as a recognised market price for them exists. This is a major boost for flexibility.
Clearer Treasury Services: The definition of treasury and financing services has been refined to explicitly include activities performed for related parties.
Key Change 2: Recognised Pricing Agencies for Compliance
Certainty is crucial when it comes to tax compliance. The second ministerial decision provides a definitive list of recognised price reporting agencies.
Why does this matter? If your business trades commodities, you must use prices from these agencies to meet compliance standards. This new list removes any guesswork, making it much easier for your business to follow the rules and ensure you are correctly valuing your transactions.
What This Means for Your Free Zone Business
These updates are a positive development, offering a more supportive framework for businesses in the UAE's free zones.
More Opportunity: With a wider range of commodities now qualifying, your business may have new avenues for trade and growth while maintaining your tax advantages.
Greater Clarity: The new decisions replace the older 2023 rules, providing a clearer and more predictable legal framework. This helps in strategic planning and reduces compliance risks.
Enhanced Flexibility: The ability to trade commodities that aren't in their raw form and the updated rules on distribution give businesses more operational freedom.
How Zyla Accountants Can Help
Navigating changes in corporate tax law can be complex, and getting it wrong can be costly. As registered FTA Agents with deep expertise in Accounting and Corporate Tax in Dubai, we are perfectly positioned to guide your business through these new regulations.
Our team can help you:
Assess your eligibility for the free zone corporate tax regime under the new rules.
Ensure your commodity trading activities are fully compliant with the new pricing guidelines.
Structure your operations to maximise the tax benefits available to you.
Don't leave your compliance to chance. Contact Zyla Accountants today for a consultation to understand how these important updates impact your free zone business.