The UAE's Ministerial Decision No. 265 of 2023 outlines which activities qualify for tax incentives under the Free Zone Corporate Tax regime. Ship-related businesses need to assess their eligibility to be classified as a QFZP in order to enjoy a 0% corporate tax rate on qualifying income.

A Free Zone Person (FZP) is any entity established or registered within a UAE Free Zone. However, not all FZPs qualify for the 0% corporate tax rate. To enjoy this benefit, a business must be classified as a Qualifying Free Zone Person (QFZP) and meet specific criteria.

To maintain QFZP status and benefit from tax incentives, businesses must meet the following conditions:

• 📍 Be a Free Zone Person – The entity must be incorporated, registered, or otherwise established within a UAE Free Zone.
  
  

• 🏢 Maintain adequate economic substance within the Free Zone – Significant business operations must be conducted within the Free Zone.
  
  

• 💼 Derive qualifying income – The majority of revenue must come from approved qualifying activities.
  
  

• 🚫 Avoid excluded activities – Income should not primarily come from activities that are disqualified from tax benefits.
  
  

• 📝 Prepare and file corporate tax returns – Accurate and timely tax filings are essential.
  
  

• ⚖️ Comply with transfer pricing regulations – Related-party transactions must adhere to UAE tax laws.
  
  

Failure to meet these criteria can result in losing QFZP status, leading to a 9% corporate tax rate instead of the 0% incentive.

Ship-related businesses may qualify for the 0% corporate tax rate if they engage in the following qualifying activities:

• 🚢 International shipping operations – Transportation of cargo and passengers across international waters.
  
  

• ⚓ Port and terminal management – Operating and managing ports, terminals, and docking facilities.
  
  

• ⛴️ Ship leasing and chartering – Renting vessels for business operations.
  
  

• 🛠️ Ship maintenance and repair – Dry docking, repairs, and technical maintenance of ships.
  
  

• 📦 Logistics and supply chain services related to shipping – Storage, freight forwarding, and transportation support.
  
  

• ⚙️ Marine engineering and technical services – Engineering solutions and vessel design services.
  
  

• 📑 Ship registration and licensing services – Registering and certifying vessels for operations.
  
  

• 🛳 Bunker fuel supply to international vessels – Providing fuel for ships operating internationally.
  
  

• 📜 Technical ship management services – Supervision and administration of ship operations.
  
  

• 🏗️ Shipbuilding and ship conversion – Construction and modification of vessels.
  
  

These activities contribute to the Free Zone’s economic ecosystem and are recognized as qualifying for tax incentives.

Certain activities exclude businesses from Free Zone tax benefits, including:

• 🚌 Passenger transport (domestic) – Transporting passengers within the UAE.
  
  

• 🏨 Retail and hospitality services – Hotels, restaurants, and entertainment businesses.
  
  

• 💰 Banking and insurance services – Financial institutions and insurance companies.
  
  

• 🏢 Real estate and property management – Buying, selling, or leasing real estate assets.
  
  

• 📉 Non-qualifying trading activities outside the Free Zone – Selling goods and services outside Free Zone jurisdictions.
  
  

• ⚓❌ Offshore marine services unrelated to Free Zone operations – Services rendered outside the Free Zone without a direct connection to Free Zone activities.
  
  

• ⛽ Fuel supply for non-qualifying ships – Bunkering fuel for vessels that do not qualify for tax incentives.
  
  

• 📊 Investment fund management – Financial services that do not align with Free Zone tax incentives.

If a business primarily engages in these excluded activities, it cannot maintain QFZP status and will be taxed at the standard 9% rate.

Filing corporate tax returns correctly is essential to ensure compliance and avoid penalties. Ship-related businesses must follow the correct process when submitting their returns.

📜 Confirmation Message: After submission, you will receive a Reference Number – save it for tracking.

⏳ FTA Review Process: The Federal Tax Authority (FTA) will review your amendment request.

📧 Check Email & Portal: Stay updated by checking your email and EmaraTax portal for status updates.

📌 For full details, refer to the FTA Corporate Tax Amendment Manual.

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