A Free Zone company keeps its 0% corporate tax only if non-qualifying revenue stays within the lower of 5% of total revenue or AED 5,000,000. Breach it and you lose QFZP status โ 9% on everything, for five years. Check where you stand.
QFZP de minimis status
Within the de minimis limit โ AEDย 165,000 headroom
A Qualifying Free Zone Person (QFZP) pays 0% corporate tax on its qualifying income. One of the conditions to keep that status is the de minimis rule: non-qualifying revenue must not exceed the lower of:
If you breach it, the consequence is severe: the entity becomes a standard taxable person at 9% on all taxable income (above the AED 375,000 zero band) โ not just the non-qualifying slice โ for that period and the next four tax periods. Compare the cost with the Corporate Tax Calculator.
Revenue attributable to a permanent establishment or to immovable property is excluded from this calculation and taxed at 9% separately โ it does not, by itself, break QFZP status.
To keep its 0% corporate tax rate, a Qualifying Free Zone Person's non-qualifying revenue must not exceed the lower of 5% of its total revenue or AED 5,000,000. Staying within this de minimis limit is one of the core conditions for QFZP status.
The entity ceases to be a QFZP and becomes a standard taxable person โ subject to 9% corporate tax on ALL of its taxable income (above the AED 375,000 zero band), not just the non-qualifying part. Crucially, this applies for that tax period AND the subsequent four tax periods โ five years in total.
Whichever is lower. For smaller Free Zone companies the 5% test usually binds; for very large ones (revenue above AED 100 million) the AED 5,000,000 absolute cap binds. This tool highlights which limit applies to you.
Broadly, income from Excluded Activities, and income from transactions with non-Free Zone persons that are not Qualifying Activities. Revenue attributable to a domestic or foreign permanent establishment, or to immovable property, is excluded from the de minimis calculation and taxed separately at 9%.
Common strategies include routing non-qualifying / mainland-facing activity through a separate mainland entity, or restructuring contracts so income qualifies. Always plan this with a qualified UAE tax adviser before year-end โ the 5-year consequence makes a late breach very costly.
No. The test runs entirely in your browser โ your revenue figures never leave your device.
Disclaimer: This is a general planning estimate of the QFZP de minimis test, not tax advice. Qualifying vs non-qualifying classification, substance requirements, and PE rules are fact-specific. The 5-year consequence of a breach makes professional advice essential โ verify with the Federal Tax Authority or a qualified UAE tax adviser. See our full disclaimer.