Who is a Qualifying Free Zone Person?
A Free Zone Person can be a “Qualifying Free Zone Person” or a “non – Qualifying Free Zone Person” . The difference is important because the income of a Qualifying Free Zone Person, may be eligible for 0% tax regime subject to meeting certain prescribed conditions. However, the income of a Non- Qualifying Free Zone Person is liable to you a corporate tax, even if such a person is incorporated in a free zone .
In order to fall within the definition of “Qualifying Free Zone Person”, all of the following conditions , need to be satisfied. Failure to meet even one of these conditions, can result in a person being a non – Qualifying Free Zone Person”
- The Free zone person should maintain adequate substance in a Free Zone;
- The Free zone person should derive Qualifying Income;
- The Free zone person should not have made an election to be subject to the regular UAE Corporate Tax regime;
- The Free zone person should comply with arm’s length principle and transfer pricing rules and documentation requirements;
- The Free zone person should prepare and maintain audited financial statements
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