Corporate Tax Impact on Free Zone Businesses in Dubai
                      
Corporate Tax Impact on Free Zone Businesses in Dubai 
 
Free zone businesses in Dubai benefit from a preferential corporate tax regime under UAE law, 
where qualifying entities can enjoy 0% tax on eligible income while facing 9% on non-qualifying 
portions. 
Key Tax Rates 
Qualifying Free Zone Persons (QFZPs) pay 0% on income from approved activities, such as 
manufacturing or logistics, but 9% applies to mainland dealings or excluded activities like 
banking. Recent 2025 updates via Ministerial Decisions 229 and 230 refine definitions for these 
activities, repealing prior rules to boost transparency and OECD alignment. Non-compliance 
risks four-year disqualification from exemptions. 
Qualifying Criteria 
Businesses must maintain separate Free Zone and mainland accounts, adhere to arm's-length 
pricing, and avoid substantial non-qualifying revenue (typically under 5% de minimis threshold). 
Mainland branches trigger 9% tax on local income unless segregated properly. Dubai free zones 
like Meydan or SPC emphasize full compliance for sustained 0% benefits. 
 
 
 
 
Updates 
New rules expand tax-free eligibility but demand rigorous documentation ahead of filings, 
balancing UAE's competitiveness with global standards. Free zone firms should reassess 
operations to meet updated Qualifying Activity lists 
Conclusion 
Lewis and Pecker stands out as a trusted chartered accounting firm in Dubai, delivering reliable 
and result-driven corporate tax services across the UAE. With deep regulatory knowledge, a 
client-focused approach, and practical tax solutions, the firm helps businesses stay compliant 
while optimizing their tax position. Their expertise makes them a dependable partner for 
navigating the evolving corporate tax landscape in Dubai and the UAE.