This Industry as a Qualifying Activity Under MD 229/2025
Ministerial Decision No. 229 of 2025 — issued on 28 August 2025 and effective from 1 June 2023 — defines the complete list of Qualifying Activities for QFZP purposes. This industry is covered within Article 2 of that Decision, making it eligible for the 0% Corporate Tax rate for free zone companies meeting all conditions.
Legal basis: Ministerial Decision No. 229 of 2025 replaces Ministerial Decision No. 265 of 2023. If you previously assessed your QFZP eligibility under MD 265/2023, review your position against the updated MD 229/2025 — particularly the expanded Qualifying Commodities definition and the new mandatory audit condition under MD 84/2025.
What Specifically Qualifies
For a company in this sector to qualify as a QFZP, its primary activities must fall within the Qualifying Activities defined in MD 229/2025, and its non-qualifying revenue must remain within the de minimis threshold. The qualifying income from these activities is then subject to 0% Corporate Tax, while any non-qualifying income is taxed at 9%.
- Primary revenue-generating activities must be from the qualifying category listed in MD 229/2025
- Activities must be conducted within the UAE free zone (adequate substance required)
- Related-party transactions must meet the arm's length standard under CT Law Article 34
- Transactions with natural persons (consumers) are generally excluded — B2B is the safe model
- Ancillary activities closely related to the main qualifying activity also qualify under Article 2(1)(n)
Ancillary activities: Article 2(3) of MD 229/2025 confirms that an activity is "ancillary" where it is necessary for the performance of the main qualifying activity or makes a minor contribution to it and is so closely related that it should not be regarded as a separate activity. Well-structured operations can capture ancillary revenue within the qualifying category. Fastlane's accounting service maps your revenue streams to the correct QFZP categories.
What Does Not Qualify
- Transactions with natural persons (consumers) — an Excluded Activity under MD 229/2025 for most qualifying activity categories
- Banking activities — regulated financial activities under Federal Decree-Law No. 14/2018 are fully excluded
- Direct insurance activities — excluded (reinsurance is the exception)
- Standalone finance and leasing — subject to regulatory oversight, not associated with qualifying activities
- Immovable property income from non-free-zone persons — property rental to mainland entities is excluded
The De Minimis Rule
Article 3 of MD 229/2025 allows QFZP companies to derive a small amount of non-qualifying revenue without losing QFZP status — provided it does not exceed 5% of total revenue OR AED 5,000,000, whichever is lower.
| Total Revenue | Max Non-Qualifying (5%) | AED 5M Cap? |
|---|---|---|
| AED 10M | AED 500,000 | No |
| AED 50M | AED 2,500,000 | No |
| AED 120M | AED 5,000,000 | Yes — capped |
| AED 500M | AED 5,000,000 | Yes — capped |
Monthly tracking of qualifying vs non-qualifying revenue is essential. Fastlane's cloud accounting setup categorises revenue by QFZP status automatically, giving you a real-time de minimis position throughout the year.
Audit Requirement Under MD 84/2025
All QFZP companies must prepare audited financial statements as a mandatory condition of the 0% CT rate — under Article 5(1)(b) of MD 229/2025 read with Ministerial Decision No. 84 of 2025. This requirement applies even if your free zone does not independently require an annual audit.
- IFRS-compliant financial statements prepared annually
- Audited by a licensed UAE statutory auditor
- Records retained for 7 years and available for FTA inspection
- Separate tracking of qualifying income vs non-qualifying income in the accounts
Fastlane is a Ministry of Economy registered auditor covering all major UAE free zones. We deliver the IFRS audit required under MD 84/2025, the free zone annual audit for license renewal, and the CT return in a coordinated single engagement — avoiding duplication of cost and effort. View the accounting and audit service →
How Fastlane Helps
QFZP-Ready Accounting
Books structured to separate qualifying and non-qualifying revenue with real-time de minimis monitoring — from AED 499/month
CT Filing
Annual CT return filed with the 0% QFZP election, qualifying income computation, and EmaraTax submission by FTA-registered agents
MD 84/2025 Audit
Statutory IFRS audit required for QFZP status — coordinated with free zone audit where applicable to avoid duplication
Transfer Pricing
TP documentation for related-party transactions exceeding AED 3M — mandatory under UAE CT Law for qualifying structures
What Is the QFZP 0% Tax Regime?
The UAE Corporate Tax Law (Federal Decree-Law No. 47/2022) introduced a 9% Corporate Tax rate. However, free zone companies meeting the conditions of a Qualifying Free Zone Person (QFZP) pay 0% Corporate Tax on Qualifying Income. The qualifying activities are defined in Ministerial Decision No. 229 of 2025, effective 1 June 2023.
To maintain QFZP status, a company must: (1) conduct only Qualifying Activities, (2) keep non-qualifying revenue within de minimis limits, (3) maintain adequate substance in the free zone, (4) prepare audited financial statements (MD 84/2025), and (5) not have a mainland Permanent Establishment.
4-year disqualification penalty: Any breach of QFZP conditions at any point in a tax period results in loss of qualifying status from the beginning of that period and for the subsequent 4 tax periods — meaning 5 years of 9% CT. Ongoing compliance monitoring is essential.
Conditions to Maintain 0% Status
Adequate Substance
Core activities in the free zone. UAE-based management, employees, and decision-making.
Audited Financials
Mandatory IFRS audit under MD 84/2025 — required for every tax period in which 0% rate is claimed.
De Minimis
Non-qualifying revenue must not exceed 5% of total revenue or AED 5M (whichever is lower).
No Mainland PE
No Permanent Establishment in UAE mainland that would bring non-qualifying income into the structure.
📊 QFZP-Ready Accounting & CT Filing
Fastlane structures your accounting to track qualifying vs non-qualifying income, monitors de minimis thresholds, files your annual CT return with the QFZP election, and provides the mandatory audit under MD 84/2025. Transfer pricing documentation available for related-party transactions.
Frequently Asked Questions
The Qualifying Free Zone Person (QFZP) regime allows UAE free zone companies that meet specific conditions to pay 0% Corporate Tax on their qualifying income, rather than the standard 9% rate. The qualifying activities are defined in Ministerial Decision No. 229 of 2025.
Under Article 5(2) of MD 229/2025, a company that fails to meet QFZP conditions at any point loses qualifying status from the beginning of that tax period and for the subsequent 4 tax periods — meaning 5 years of 9% CT rather than 0%.
Yes. Article 5(1)(b) of MD 229/2025 requires all QFZP companies to prepare audited financial statements in accordance with Ministerial Decision No. 84 of 2025. This is a mandatory condition for claiming the 0% rate — not optional.
Article 3 of MD 229/2025 allows QFZP companies to have non-qualifying revenue up to 5% of total revenue or AED 5,000,000 — whichever is lower — without losing QFZP status. Exceeding this threshold triggers the 4-year disqualification period.
Fastlane is an FTA-registered tax agent (TRN: 104218042400003) providing QFZP-ready accounting to track qualifying vs non-qualifying income, annual CT return filing with the QFZP election, the mandatory MD 84/2025 audit, and transfer pricing documentation for related-party transactions. WhatsApp for a free initial QFZP review.
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.