- What Is the QFZP 0% Tax Regime?
- Why Logistics Is a Qualifying Activity
- What Counts as Logistics Services Under MD 229/2025
- What Does NOT Qualify
- Conditions to Maintain 0% Status
- The De Minimis Rule
- Audit Requirement for Logistics Companies
- Which Free Zones Apply
- How Fastlane Helps Logistics Companies
- Frequently Asked Questions
- Related QFZP Guides
What Is the QFZP 0% Tax Regime?
The UAE Corporate Tax Law (Federal Decree-Law No. 47/2022) introduced a 9% Corporate Tax rate for most businesses. However, free zone companies that meet the conditions of a Qualifying Free Zone Person (QFZP) pay 0% Corporate Tax on their Qualifying Income — one of the most significant tax incentives in the UAE.
The rules governing which activities qualify were updated by Ministerial Decision No. 229 of 2025 (issued 28 August 2025, effective 1 June 2023), which replaced Ministerial Decision No. 265 of 2023. Logistics services are explicitly listed as a Qualifying Activity under Article 2(1)(m) of this Decision.
Key point: The 0% rate applies only to Qualifying Income derived from Qualifying Activities. Income from Excluded Activities is subject to the standard 9% CT rate. A QFZP company must track and separate qualifying and non-qualifying income carefully — and maintain audited financial statements as a condition of the regime.
Why Logistics Is a Qualifying Activity
Article 2(1)(m) of Ministerial Decision No. 229 of 2025 explicitly includes logistics services as one of the 13 Qualifying Activities available to a QFZP. This makes logistics companies operating from UAE free zones among the clearest beneficiaries of the 0% CT rate — provided they meet the other conditions.
Qualifying: Logistics Services
Storage, transportation, cargo handling, warehousing, freight forwarding, customs brokerage, order management — all qualify under MD 229/2025
Also Qualifying: Distribution
Distribution of goods from a Designated Zone is a separate qualifying activity — complementary to logistics for many operators
Risk: Natural Persons
Transactions with natural persons (i.e. individual consumers) are an Excluded Activity. B2C logistics can disqualify QFZP status
De Minimis Buffer
Up to 5% of total revenue (or AED 5M, whichever is lower) from non-qualifying activities is permitted without losing QFZP status
What Counts as Logistics Services Under MD 229/2025
Article 2(3)(m) of MD 229/2025 defines logistics services to include the storage and transportation of goods or materials on behalf of another Person without taking title to the goods. The key distinction is that a logistics provider does not own the goods — it moves or stores them for clients.
The definition explicitly includes all of the following:
- Cargo handling
- Warehousing and storage
- Container storage
- Transport agency services
- Customs brokerage services
- Order and inventory management (on behalf of clients)
- Freight forwarding and brokerage services
- Document preparation
- Packing and unpacking
- Other closely related logistics services
Critical distinction — title to goods: A logistics company must not take title to the goods it handles. The moment a company buys and resells goods, it transitions from logistics into trading or distribution — different qualifying activities with different rules. Maintaining this distinction in your accounting records is essential for QFZP compliance. Fastlane's accounting service sets up your books to capture this distinction correctly.
What Does NOT Qualify
Even for a logistics company that primarily conducts qualifying activities, certain income streams will be treated as non-qualifying and subject to 9% CT:
- Transactions with natural persons — delivering to individual consumers (B2C) is an Excluded Activity under MD 229/2025
- Ownership of the goods transported — if you take title, the activity becomes trading, not logistics
- Real estate income — rental income from warehouses or property to mainland entities
- Finance and leasing — leasing vehicles or equipment in a regulated manner falls under Excluded Activities
- Banking and insurance activities — fully excluded regardless of free zone status
The 4-year penalty: Under Article 5(2) of MD 229/2025, a QFZP that fails to meet the conditions at any point loses its qualifying status from the beginning of that tax period and for the subsequent 4 tax periods. A single year of non-compliance means 5 years of 9% CT. Proactive monitoring of activity classification is essential. Fastlane's transfer pricing and CT advisory team helps logistics companies maintain ongoing compliance.
Conditions to Maintain 0% Status
Beyond conducting qualifying activities, a logistics company must meet all QFZP conditions under Article 18 of the CT Law and MD 229/2025:
Adequate Substance
Core income-generating activities must be conducted in the free zone. Management and employees must be present in the UAE.
Audited Financial Statements
MD 84/2025 requires QFZP companies to prepare audited financial statements. This is now a mandatory condition — not optional.
De Minimis Compliance
Non-qualifying revenue must not exceed 5% of total revenue or AED 5M (lower applies) in each tax period.
No Mainland CE
The free zone company must not have a Permanent Establishment in mainland UAE that would bring mainland income into the qualifying structure.
📊 Accounting & CT Filing for QFZP Logistics Companies
Fastlane maintains IFRS-compliant books that track qualifying vs non-qualifying income, files your annual CT return, and prepares audit-ready financial statements required under MD 84/2025.
The De Minimis Rule for Logistics Companies
Article 3 of MD 229/2025 sets the de minimis threshold: a QFZP retains its status even if it has some non-qualifying revenue, provided that revenue does not exceed 5% of total revenue OR AED 5,000,000 — whichever is lower.
For a logistics company this means:
| Total Annual Revenue | Maximum Non-Qualifying Revenue (5%) | AED 5M Cap Applies? |
|---|---|---|
| AED 5,000,000 | AED 250,000 | No — 5% applies |
| AED 20,000,000 | AED 1,000,000 | No — 5% applies |
| AED 50,000,000 | AED 2,500,000 | No — 5% applies |
| AED 150,000,000 | AED 5,000,000 | Yes — capped at AED 5M |
| AED 500,000,000 | AED 5,000,000 | Yes — capped at AED 5M |
Practical implication: A logistics company with AED 10M revenue and AED 400,000 of B2C income (4%) stays within de minimis. The same company with AED 600,000 B2C income (6%) loses QFZP status for that year and the following 4 years. Monthly revenue tracking by category is essential. Fastlane's cloud accounting setup flags this automatically.
Audit Requirement for QFZP Logistics Companies
Article 5(1)(b) of MD 229/2025 introduces an explicit condition: a QFZP must prepare audited financial statements in accordance with Ministerial Decision No. 84 of 2025. This is a new mandatory condition — not a free zone requirement that can be waived, but a federal CT law requirement for anyone claiming the 0% rate.
This means every logistics company claiming QFZP status must:
- Prepare IFRS-compliant financial statements annually
- Have those statements audited by a licensed UAE auditor
- Maintain the audit report and underlying records for 7 years
- Make all records available to the FTA on request
Free zone audit vs CT audit requirement: Many logistics companies in JAFZA, DSO, DWC, or IFZA already get a free zone audit for license renewal. The MD 84/2025 requirement is separate and additional — it applies even if your free zone does not require one. Fastlane covers both the free zone audit and the CT-required audit in a single engagement. View the accounting and audit service →
Which Free Zones Apply to Logistics QFZPs
The QFZP regime applies to any UAE free zone recognised under Cabinet Decision No. 100 of 2023. Major free zones for logistics operators include:
| Free Zone | Logistics Activity | Audit Required | Designated Zone |
|---|---|---|---|
| JAFZA | ✓ | ✓ | ✓ |
| DWC / Dubai South | ✓ | ✓ | ✓ |
| DSO | ✓ | ✓ | Partial |
| IFZA | ✓ | ✓ | ✗ |
| RAKEZ | ✓ | ✓ | Partial |
| KIZAD (Abu Dhabi) | ✓ | ✓ | ✓ |
How Fastlane Helps QFZP Logistics Companies
Fastlane is an FTA-registered tax agent (TRN: 104218042400003) and Ministry of Economy registered auditor with specific expertise in UAE free zone Corporate Tax — including QFZP qualification, ongoing compliance, and CT filing for logistics operators.
QFZP-Ready Accounting
Books structured to track qualifying vs non-qualifying revenue with de minimis monitoring — from AED 499/month
CT Filing
Annual Corporate Tax return filed with QFZP election, qualifying income computation, and EmaraTax submission
Statutory Audit
IFRS audit required under MD 84/2025 — Fastlane covers free zone and CT audit requirements in one engagement
Transfer Pricing
If your logistics company has related-party transactions >AED 3M, TP documentation is mandatory under CT Law
Frequently Asked Questions
Yes. Logistics services are explicitly listed as a Qualifying Activity under Article 2(1)(m) of Ministerial Decision No. 229 of 2025. A logistics company operating from a UAE free zone and meeting all other QFZP conditions pays 0% Corporate Tax on its qualifying logistics income.
Under MD 229/2025, logistics services includes storage and transportation of goods on behalf of clients (without taking title), cargo handling, warehousing, container storage, transport agency services, customs brokerage, order and inventory management, freight forwarding, document preparation, and packing/unpacking services.
Transactions with natural persons (individual consumers) are an Excluded Activity under MD 229/2025. However, the de minimis rule allows up to 5% of total revenue (or AED 5M, whichever is lower) from non-qualifying activities — meaning a small amount of B2C logistics revenue may not disqualify the company.
Yes. Article 5(1)(b) of MD 229/2025 requires all QFZP companies to prepare audited financial statements under Ministerial Decision No. 84 of 2025. This is a mandatory condition for claiming the 0% CT rate — separate from any free zone audit requirement.
Under Article 5(2) of MD 229/2025, a company that fails to meet QFZP conditions loses qualifying status from the beginning of the relevant tax period and for the subsequent 4 tax periods. This means 5 years of 9% CT rather than 0%. Proactive compliance monitoring is essential.
Reviewed by Fastlane Corporate Tax Advisory Team
This guide is based on Ministerial Decision No. 229 of 2025 (effective 1 June 2023, issued 28 August 2025) and the FTA's Free Zone Persons CT Guide. Always verify your specific activities with a qualified UAE tax adviser before making QFZP elections. Fastlane offers a free initial Corporate Tax review for UAE free zone companies.