Free UAE Tool — Updated 22 June 2026
UAE Free Zone Qualifying Income Checker
Test the de-minimis threshold for UAE Qualifying Free Zone Person (QFZP) status under Federal Decree-Law No. 47 of 2022, Article 18 + Cabinet Decision 55/2023. Breach the lower of 5% of total revenue OR AED 5,000,000 in non-qualifying income, and QFZP status is lost for five years — see the Federal Tax Authority free zone persons guidance and our full UAE free zone corporate tax guide for the wider QFZP context.
QFZP rules
The de-minimis test is the most-failed QFZP condition.
Qualifying income (0% CT)
- · Transactions with other free zone persons (excluding excluded activities)
- · Manufacturing of goods
- · Distribution from a Designated Zone
- · Holding of shares + other securities
- · Ownership of qualifying intellectual property
- · Headquarters services to related parties
- · Fund management services subject to regulation
- · Wealth + investment management subject to regulation
Excluded activities (always 9% CT)
- · Transactions with UAE natural persons
- · Banking activities
- · Insurance activities
- · Finance + leasing (except intra-group)
- · Ownership of immovable property (except commercial property in FZ to other FZ persons)
- · Income from intellectual property (outside Qualifying IP rules)
Penalty for breach
Article 18(2) of FDL 47/2022: breach the de-minimis test in any tax period and the free zone person is disqualified from QFZP status for that period AND the next four tax periods — five years at the standard 9% CT rate on all income above AED 375,000. The penalty severity is why most QFZPs monitor non-qualifying revenue monthly, not annually.
Scope & disclaimer
This checker only computes the de-minimis arithmetic under FDL 47/2022 Article 18(2). It does NOT assess: substance adequacy, classification of specific transactions as qualifying vs non-qualifying, transfer-pricing compliance, audited financial statement requirements, or the qualifying-activity tests under Ministerial Decision 265/2023.
A QFZP decision binds the entity for five tax periods. Velmont Crest is a UAE accounting and advisory firm — not a registered FTA tax agent. See our UAE corporate tax services or engage a qualified CT advisor before relying on QFZP status.
QFZP FAQs
Quick answers on UAE Qualifying Free Zone Person status.
What is a Qualifying Free Zone Person (QFZP)?
A juridical free zone person that meets ALL of: (1) maintains adequate substance in the UAE, (2) derives Qualifying Income, (3) has not elected to be subject to standard CT, (4) complies with the arm's length principle + transfer pricing documentation, (5) prepares audited financial statements, and (6) meets the de-minimis test. QFZPs pay 0% CT on Qualifying Income and 9% on non-qualifying income.
What counts as Qualifying Income?
Per Cabinet Decision 55 of 2023: income from transactions with other free zone persons (excluding income from Excluded Activities), income from Qualifying Activities (per Ministerial Decision 265/2023 — manufacturing, holding shares, distribution from a Designated Zone, headquarters services to related parties, etc.), ownership of qualifying intangible assets, and ancillary income within set thresholds.
What is the de-minimis test?
A free zone person remains a QFZP only if non-qualifying revenue does NOT exceed the LOWER of: 5% of total revenue OR AED 5,000,000. Breach the de-minimis = lose QFZP status for that tax period AND the next four tax periods (Article 18(2) FDL 47/2022). The penalty for breach is severe — five-year disqualification.
Which UAE free zones are 'free zones' for CT purposes?
All 40+ UAE free zones qualify — DMCC, JAFZA, DIFC, ADGM, RAKEZ, IFZA, Meydan, SHAMS, DAFZA, Hamriyah, Sharjah Publishing City and others. Note: free zone status for CT differs from 'Designated Zone' status for VAT (Cabinet Decision 100/2024). A free zone person can be a QFZP even if its free zone isn't VAT-designated.
What are 'Excluded Activities'?
Cabinet Decision 55/2023 excludes: transactions with natural persons, banking activities, insurance activities, finance and leasing activities (except intra-group), ownership/exploitation of immovable property (except commercial property in a free zone to other free zone persons), ownership/exploitation of intellectual property (except per Qualifying Income rules). Income from excluded activities is NEVER qualifying.
What substance does a free zone entity need?
Adequate substance means: core income-generating activities conducted IN the free zone, adequate assets, adequate qualified employees, adequate operating expenditure — all proportionate to the income earned. Holding companies have lighter substance tests. The FTA reviews substance against the income mix at audit.
Can I elect OUT of QFZP status?
Yes — per Article 19(2), a free zone person can elect to be subject to the standard 9% CT regime. This can be useful if your income mix breaches de-minimis or if you want simpler compliance. Election is irrevocable for the current and next four tax periods.
Is this checker accurate for FTA filing?
It performs the de-minimis arithmetic (5% / AED 5M) correctly. It does NOT determine substance adequacy, Qualifying Income classification of specific transactions, transfer pricing compliance, or audited financial-statement requirements. A QFZP decision affects tax for five years — engage a tax advisor before relying on it.
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