Businesses operating from UAE Free Zones may need to meet new compliance requirements to continue benefiting from the 0% Corporate Tax regime.
The Federal Tax Authority (“FTA”) has introduced new compliance requirements for Qualifying Free Zone Persons (“QFZPs”) engaged in the qualifying activity of distributing goods or materials in or from a Designated Zone.The new requirements apply to Tax Periods beginning on or after 1 January 2026.Who is affected?
The new requirements apply to QFZPs carrying out the qualifying activity of distributing goods or materials in or from a Designated Zone for the purpose of sale or resale.
The requirements depend on several factors, including:
- The nature of the distribution activity.
- Whether goods enter the UAE through a Designated Zone.
- Whether customers acquire the goods for resale, processing or alteration before onward sale.
Businesses undertaking other qualifying activities are not affected by these additional requirements.
What do businesses need to do?
Affected businesses are required to obtain an annual Agreed-Upon Procedures (AUP) Report from an independent auditor.
The report verifies factual matters, including whether:
- Customers purchase goods for resale, processing or alteration before onward sale; and
- Goods imported into the UAE enter through a Designated Zone.
The biggest challenge is not obtaining the AUP report—it is ensuring your business is ready for the AUP.
The auditor’s role is to independently verify the information available and report factual findings. They cannot create missing documentation or resolve compliance gaps after the year-end. Businesses should therefore review their documentation and processes well before year-end to identify and address any gaps.
What are the consequences of non-compliance?
The AUP report must be submitted to the FTA within 30 days after the Corporate Tax return filing deadline.
Failure to comply with the new requirements could result in the conditions for the qualifying distribution activity not being satisfied, potentially affecting the availability of the 0% Free Zone Corporate Tax rate.
How can we help?
Our Corporate Tax specialists can help your business prepare for the new requirements by providing:
- Eligibility Review – Assess whether your business and distribution activities fall within the scope of the new requirements.
- AUP Readiness Review – Review existing processes and documentation to identify compliance gaps before the audit begins.
- Documentation Support – Advise on the documentation and practical measures required to support your QFZP position.
- Gap Remediation – Recommend practical solutions to strengthen compliance and reduce Corporate Tax risk before year-end.
Once your business is ready, the Audit team can perform the independent AUP engagement required by the FTA.
Final Thoughts
The new AUP requirement is more than an additional filing obligation—it requires businesses to maintain the appropriate documentation and supporting evidence throughout the year.
Businesses that start preparing early will be better placed to complete the AUP process efficiently and preserve their eligibility for the 0% Free Zone Corporate Tax regime.
If you would like to understand how these new requirements apply to your business, please contact our Corporate Tax team.
Who we are
Re/think is an award-winning regional multi-service business advisory and outsourced services firm providing accounting, regulatory and compliance, tax and VAT advisory, audit, HR consultancy and recruitment services to regulated firms, multi- and single-family offices, and other operating businesses.
Established in the UAE in 2013, the firm has 80+ staff across three offices in Dubai and Abu Dhabi providing clients with timely, proactive and customized business solutions – from set-up and early development to the latest stages of a business lifecycle.