Compliance Guide for Free Zone Companies, UAE - Corporate Tax 

Hey there!

Compliance might sound like a daunting word, but it’s a crucial part of running a successful Free Zone company. Let’s break it down into bite-sized pieces and make it as easy as chatting over coffee. Ready? Let’s dive in!

Record Keeping: Your Compliance Backbone
Even if all your income is Qualifying Income with a 0% corporate tax rate, you still need to keep all relevant records and documents for 7 years after the end of the tax period.

Think of it as maintaining a diary of your business’s financial health. And remember, if the Federal Tax Authority (FTA) asks for any information, you need to have it readily accessible.

Tax Registration: The First Step
Every Free Zone Person (QFZP) must register for corporate tax with the FTA within the prescribed timelines. Failing to do so can lead to administrative penalties. However, if you’re a non-resident juridical person with a branch in a Free Zone and only derive state-sourced income without a permanent establishment in the UAE, you might not need to register.

Accounting Standards: Keeping It Standard
You don’t need separate financial statements for your Qualifying Income, but you do need sufficient documentation to show how you calculated it. Your financial statements should adhere to the International Financial Reporting Standards (IFRS) or IFRS for SMEs if your revenue is AED 50,000,000 or less.

Audited Financial Statements: Keeping It Clear
You must prepare and maintain audited financial statements regardless of your revenue. While you don’t need separate statements for different types of income or branches, you should have enough documentation to demonstrate how you calculated your Qualifying Income.

Tax Return and Payment: The Final Step
Corporate tax is self-assessed. You need to pay any corporate tax due and file your tax return with the FTA in the form and manner prescribed within 9 months from the end of the relevant tax period.

Practical Case Study
Case Study: Company Z

Let’s see how this works in real life with Company Z, a QFZP involved in trading goods.

 - Record Keeping: Company Z maintains all financial records, invoices, and documents for 7 years.
 - Tax Registration: They registered for corporate tax with the FTA as required.
 - Accounting Standards: Company Z prepares financial statements according to IFRS.
 - Audited Financial Statements: They ensure their financial statements are audited annually.
 - Tax Return and Payment: Company Z calculates their corporate tax (if any) and files their tax return within 9 months after the tax period ends.
By following these steps, Company Z stays compliant and avoids penalties, ensuring smooth business operations.

Why It Matters
Staying compliant with these requirements ensures your business runs smoothly and avoids any legal troubles. Plus, it helps you keep a clear financial picture, which is crucial for making informed business decisions.

Need Help?
Feeling a bit overwhelmed? Don’t worry, Fastlane is here to help. We’re experts in corporate tax and can guide you through these complexities. Let's keep your business compliant and stress-free!
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