Can a free zone company lose its 0% corporate tax status in the UAE?

Yes. A free zone company keeps the 0% rate only as a Qualifying Free Zone Person (QFZP), and that status depends on meeting all the conditions throughout the period. If it breaches a condition — for example, by failing to maintain adequate substance in the UAE, earning more than the permitted level of non-qualifying revenue (the de minimis limit), not complying with transfer pricing or documentation requirements, failing to prepare audited financial statements, or deriving income that is not qualifying income — it can cease to be a QFZP. Losing QFZP status generally means the company is taxed at the standard 0%/9% rates, and the loss can apply not just for the current tax period but for a number of following tax periods as well. A free zone company can also elect out of the regime voluntarily. Because the conditions and the de minimis rules are detailed and set by Ministerial decision, a QFZP should monitor compliance carefully and confirm any borderline situation with the Federal Tax Authority or a qualified UAE tax adviser. You can compare verified UAE legal professionals on LEXAI.