Free Zone Persons

Contents

1. Glossary

2. Introduction

1. 2.1. Overview

   2.2. Purpose of this guide

   2.3. Who should read this guide?

   2.4. How to use this guide

   2.5. Legislative references

   2.6. Status of this guide

3. Free Zone Corporate Tax rules: At a glance

1. 3.1. Scope of the Free Zone Corporate Tax rules

   3.2. Conditions to be a QFZP

   1. 3.2.1. The regime is applicable to a Free Zone Person

      3.2.2. The Free Zone Person must maintain adequate substance in a Free Zone

      3.2.3. The Free Zone Person must derive Qualifying Income

      3.2.4. The Free Zone Person must not have elected to be subject to the standard Corporate Tax rules and rates

      3.2.5. The Free Zone Person must comply with the arm’s length principle

      3.2.6. The Free Zone Person must maintain Transfer Pricing documentation

      3.2.7. The Free Zone Person must maintain audited Financial Statements

      3.2.8. The non-qualifying Revenue must meet the de minimis requirements

   3.3. Taxation of a QFZP

   3.4. Losing status of a QFZP

4. Requirements to be a QFZP

1. 4.1. Introduction

   4.2. Being a Free Zone Person

   4.3. Scope of the Free Zone Corporate Tax rules

   1. 4.3.1. Beneficial Recipient

   4.4. De minimis requirements

   1. 4.4.1. Applying the de minimis requirements

   4.5. Other criteria to be a QFZP

   1. 4.5.1. Deriving Qualifying Income

      4.5.2. Arm's length principle

      4.5.3. Transfer Pricing documentation

   4.6. Election not to be a QFZP

   1. 4.6.1. Effect of an election to be subject to standard Corporate Tax rules and rates

   4.7. Losing status as a QFZP

5. Calculating Corporate Tax for a Free Zone Person

1. 5.1. Corporate Tax rate for a QFZP

   5.2. Qualifying Income

   5.3. Taxable Income that is not Qualifying Income

   5.4. Allocating expenses

   5.5. Taxable Income subject to the 9% rate of Corporate Tax

   1. 5.5.1. Tax Losses

   5.6. Taxation of a Free Zone Person that is not a QFZP

6. Maintaining adequate substance

1. 6.1. Adequate substance

   6.2. Core income-generating activities

   1. 6.2.1. Qualifying Intellectual Property

      6.2.2. Activities performed through a Domestic Permanent Establishment

   6.3. Outsourced activities

   1. 6.3.1. Adequate supervision

7. Foreign Permanent Establishment or Domestic Permanent Establishment

1. 7.1. General

   7.2. Foreign Permanent Establishment

   7.3. Domestic Permanent Establishment

   1. 7.3.1. Fixed or permanent place

      7.3.2. Cases that are not considered a fixed or permanent place

      7.3.3. Preparatory and auxiliary activities

      7.3.4. Conducting a Business outside a Free Zone in the UAE for a QFZP

8. Immovable Property