Qualifying Income (UAE Free Zones)

Qualifying income is the category of a UAE free zone entity's income that can benefit from the 0% Corporate Tax rate available to a Qualifying Free Zone Person. It generally includes revenue from transactions with other free zone persons (outside certain excluded categories), revenue from transactions with foreign persons, and revenue from certain regulated financial-services or distribution activities. The distribution of goods in or from a VAT designated zone can also be qualifying where the conditions are met. Non-qualifying income includes revenue from transactions with mainland UAE customers (unless routed through an independent distributor or otherwise permitted), certain intellectual-property income that fails the nexus requirements, and any income outside the qualifying-activity list. Non-qualifying income is taxed at the standard 9% rate, and earning excluded income can cause the entity to lose its 0% status for the period.