Yes. All entities in the free zones will be required to register and file tax returns, regardless of whether they are eligible persons based in the free zone or not.

Companies resident in the country can request to form a tax group and be treated as a single taxable person, provided that the parent company resident in the country owns (directly or indirectly) at least 95% of the capital and voting rights in each company.

The formation of a tax group requires that the parent company or any of its subsidiaries not be an exempt person or entity in the free zone that benefits from the application of the free zone corporate tax at a rate of 0%. All companies must have the same fiscal year and prepare their financial statements using the same accounting standards

Kindly note that if your taxable turnover (i.e. standard rated and zero-rated supplies) exceeds the mandatory registration threshold of AED 375,000, you will be required to register for VAT whether your business is based in a free zone or mainland. Furthermore, a business might choose to register for VAT voluntarily if their supplies and imports are less than the mandatory registration threshold, but exceeds the voluntary registration threshold of AED 187,500.Kindly refer to the frequent asked questions’ section on our website:  https://www.tax.gov.ae/en/faqs . You may also refer to the VAT registration user guide for further details: https://www.tax.gov.ae/-/media/Files/EN/PDF/Guides/VAT-User-GuideEnglishV80-06-09-2020.pdf . Furthermore, the VAT registration web portal can be accessed through: https://eservices.tax.gov.ae/en-us/
Kindly note that, once the VAT registration application submitted/ resubmitted, the FTA team will review your request and take the appropriate decision within 20 business days from the submission/resubmission date.

Kindly note that if your taxable turnover (i.e. standard rated and zero-rated supplies) exceeds the mandatory registration threshold of AED 375,000, you will be required to register for VAT whether your business is based in a free zone or mainland. Furthermore, a business might choose to register for VAT voluntarily if their supplies and imports are less than the mandatory registration threshold, but exceeds the voluntary registration threshold of AED 187,500.Kindly refer to the frequent asked questions’ section on our website:  https://www.tax.gov.ae/en/faqs . You may also refer to the VAT registration user guide for further details: https://www.tax.gov.ae/-/media/Files/EN/PDF/Guides/VAT-User-GuideEnglishV80-06-09-2020.pdf . Furthermore, the VAT registration web portal can be accessed through: https://eservices.tax.gov.ae/en-us/
Kindly note that, once the VAT registration application submitted/ resubmitted, the FTA team will review your request and take the appropriate decision within 20 business days from the submission/resubmission date.

Kindly note that if your taxable turnover (i.e. standard rated and zero-rated supplies) exceeds the mandatory registration threshold of AED 375,000, you will be required to register for VAT whether your business is based in a free zone or mainland. Furthermore, a business might choose to register for VAT voluntarily if their supplies and imports are less than the mandatory registration threshold, but exceeds the voluntary registration threshold of AED 187,500.Kindly refer to the frequent asked questions’ section on our website:  https://www.tax.gov.ae/en/faqs . You may also refer to the VAT registration user guide for further details: https://www.tax.gov.ae/-/media/Files/EN/PDF/Guides/VAT-User-GuideEnglishV80-06-09-2020.pdf . Furthermore, the VAT registration web portal can be accessed through: https://eservices.tax.gov.ae/en-us/
Kindly note that, once the VAT registration application submitted/ resubmitted, the FTA team will review your request and take the appropriate decision within 20 business days from the submission/resubmission date.

Yes. Transfer pricing rules apply to UAE businesses that have transactions with Related Parties and Connected Persons, irrespective of whether the Related Parties or Connected Persons are located in the UAE mainland, a Free Zone or in a foreign jurisdiction.

A designated zone is the term used in the UAE to describe a specified area that is considered outside the UAE for excise tax purposes.

For an area to be treated as a designated zone, it must be officially registered and approved by the FTA and a warehouse keeper must be appointed as responsible over the designated zone.

A designated zone should be a fenced area intended to be a free zone that cannot be entered or exited except through a designated road and any area designated by the FTA as being subject to the supervision of a warehouse keeper.

A designated zone should be a fenced area intended to be a free zone that cannot be entered or exited except through a designated road and any area designated by the FTA as being subject to the supervision of a warehouse keeper.

A “juridical person” is an entity established or otherwise recognised under the laws and regulations of the UAE, or under the laws of a foreign jurisdiction, that has a legal personality separate from its founders, owners and directors. Examples of UAE domestic juridical persons include a limited liability company, a foundation, an ‘onshore’ trust, a public or private joint stock company, and other entities that have separate legal personality under the applicable UAE ‘mainland’ legislation or Free Zone regulations. 
 UAE branches of a domestic or a foreign juridical person are regarded as an extension of their “parent” or “head office” and, therefore, are not considered separate juridical persons.

UAE holding companies would be subject to UAE CT (at a 9% CT rate or the 0% Free Zone CT rate), depending on whether the holding company is established in a Free Zone or in the mainland UAE, but dividends and capital gains earned from domestic and foreign shareholdings would generally be exempt from CT, subject to certain conditions.

Taxpayer	Applicable CT rate
Individuals and juridical persons	0% for taxable income up to and including AED 375,000 (this amount is to be confirmed in a Cabinet Decision) 9% for taxable income exceeding AED 375,000
Qualifying Free Zone Persons (see further information below)	0% on qualifying income 9% on taxable income that does not meet the qualifying income definition

Domestic dividends and other profit distributions earned from UAE juridical persons are exempt from UAE CT, irrespective of the level of ownership in the UAE juridical person paying the dividend or profit share. This exemption also applies to dividends received from a UAE juridical person  that benefits from a CT exemption or whose profits are subject to the 0% Free Zone CT rate.

Tax losses from one UAE group company may be used to offset taxable income of another UAE group company where there is 75% or more common ownership and certain other conditions are met. 

No tax loss transfers will be allowed from companies that are exempt or that benefit from the 0% Free Zone CT regime.

The UAE companies must meet the following conditions to transfer an amount of tax losses from one company to another in the same Tax Period:
1. Both companies are UAE resident juridical persons;
2. Either owns 75% or more of the other, or a third party owns 75% or more of both entities and this ownership existed at the start and end of the Tax Period in which the loss was incurred;
3. Neither company is an Exempt Person;
4. Neither company is a Qualifying Free Zone business; and
5. The financial statements must be prepared using the same accounting standards, and using the same financial year.

Entities established in a Free Zone that meet the conditions to benefit from the Free Zone CT regime (“Qualifying Free Zone Persons”) will be subject to UAE CT at the following rates:
● 0% on Qualifying Income.
● 9% on Taxable Income that does not meet the Qualifying Income definition.

A Qualifying Free Zone Person that meets the relevant conditions will be able to benefit from the 0% Free Zone CT regime automatically. However, a Qualifying Free Zone Person can elect not to apply the Free Zone CT regime, but instead be subject to the regular CT regime and rates.  

To be treated as a “Qualifying Free Zone Person”, the Free Zone entity must:
1. Maintain adequate substance in the UAE;
2. Derive “Qualifying Income” as specified in a Cabinet Decision;
3. Comply with transfer pricing rules and maintain the relevant transfer pricing documentation; and
4. Not have made an election to be subject to CT in full.

Yes. All Free Zone entities will be required to register and file a CT return, irrespective of whether they are a Qualifying Free Zone Person or not. 

No. The UAE CT treatment will be the same for all Free Zone entities. 

Qualifying Free Zone entities that are part of a large multinational group are anticipated to be subject to a different CT rate once the Pillar Two rules are embedded into the UAE CT regime.