Do free zone companies pay corporate tax in the UAE?

Free zone companies are within the scope of UAE corporate tax, but a company that qualifies as a Qualifying Free Zone Person (QFZP) can continue to benefit from a 0% rate on its qualifying income. Income that is not qualifying income is generally taxed at the standard 9% rate. To be a QFZP, a free zone entity must, among other conditions, maintain adequate substance in the UAE, derive qualifying income, comply with transfer pricing rules, not have elected to be taxed at standard rates, and meet the de minimis requirements for non-qualifying revenue. If a free zone company breaches the conditions, it can lose QFZP status, potentially for the current and following tax periods. All free zone entities must still register for corporate tax and file returns, even where the rate on their income is 0%. Because "qualifying income" is defined narrowly by Cabinet and Ministerial decisions, free zone businesses should confirm their eligibility carefully with the Federal Tax Authority or a qualified UAE tax adviser. Verified UAE legal professionals are listed on LEXAI.