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Qualifying Free Zone Person: de minimis

Applies
FY2024 onwards
Reviewed
Rule
UAE-CT-QFZP-DEMIN-2024.1
By

What is the QFZP de minimis limit?

Non-qualifying revenue must not exceed 5% of total revenue or AED 5 million, whichever is lower, in each tax period.

Per Federal Decree-Law No. 47 of 2022, Articles 3(2) and 18, Qualifying Free Zone Person

A Qualifying Free Zone Person's non-qualifying Revenue in a Tax Period must not exceed 5% of its total Revenue or AED 5,000,000, whichever is lower. Non-qualifying Revenue is Revenue from Excluded Activities, from non-Qualifying Activities with Non-Free Zone Persons, and from Free Zone Persons that are not the Beneficial Recipient. Taxable Free Zone property revenue, Permanent Establishment revenue and non-qualifying intellectual-property revenue are left out of both figures.

One of the conditions for Qualifying Free Zone Person status. Within the ceiling, non-qualifying Revenue is still Qualifying Income taxed at 0% (Cabinet Decision No. 100 of 2023, Article 3(1)(d)). Above it, the person ceases to be a Qualifying Free Zone Person from the beginning of that Tax Period and for the subsequent four (Ministerial Decision No. 229 of 2025, Article 5(2)).

The de minimis ceiling

Non-qualifying Revenue must not exceed the lower of

  • 5% of total Revenue
  • AED 5,000,000

Non-qualifying Revenue — CD 100 of 2023, Article 4(2)

  • Revenue from Excluded Activities
  • Revenue from activities that are not Qualifying Activities, where the other party is a Non-Free Zone Person
  • Revenue from transactions with a Free Zone Person that is not the Beneficial Recipient

Left out of both figures — Article 4(3)

  • Revenue from immovable property in a Free Zone that is not Commercial Property, or is Commercial Property transacted with a Non-Free Zone Person (taxed at 9% under Article 6 instead)
  • Revenue attributable to a Domestic or Foreign Permanent Establishment (taxed at 9% under Article 5)
  • Revenue from intellectual property, other than the Qualifying Income from Qualifying Intellectual Property

The consequence of failing — MD 229 of 2025, Article 5(2)

Not a one-period event: the person ceases to be a Qualifying Free Zone Person from the beginning of the Tax Period and for the subsequent four Tax Periods, and its whole Taxable Income is taxed under Article 3(1) for those periods.

Order of testing

  1. 1

    Inputs requiring your determination

    Any input a person must supply and has not supplied stops the computation.

  2. 2

    De minimis ceiling

    Non-qualifying revenue is compared with the lower of the published percentage of total revenue and the published cap. Within the ceiling, the requirement is met; above it, the requirement is failed.

Examples

Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.

Percentage binds

A Free Zone Person with AED 10,000,000 total revenue and AED 400,000 of non-qualifying revenue, where 5% of total revenue is the lower ceiling.

Computed

Meets the de minimis requirement as computed: non-qualifying revenue of AED 400,000 is within the ceiling of AED 500,000 — the lower of 5% of total revenue and the published cap of AED 5,000,000 — based on the figures you supplied.

Decided by the de minimis ceiling

Cap binds

A larger Free Zone Person with AED 200,000,000 total revenue, where the absolute cap is the lower ceiling, and AED 6,000,000 of non-qualifying revenue.

Computed

Exceeds the de minimis requirement as computed: non-qualifying revenue of AED 6,000,000 is above the ceiling of AED 5,000,000 — the published cap, whichever is lower — so the requirement is failed, based on the figures you supplied. Under Article 5(2) of Ministerial Decision No. 229 of 2025 the person then ceases to be a Qualifying Free Zone Person from the beginning of this Tax Period and for the subsequent four Tax Periods, and all its Taxable Income is taxed at the Article 3(1) rates.

Decided by the de minimis ceiling

Try it

Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.

Not computed yet

2 inputs still need your determination:

  • What is the total Revenue for the Tax Period — excluding Free Zone property revenue that is residential or from Non-Free Zone tenants of Commercial Property, revenue of a Domestic or Foreign Permanent Establishment, and non-qualifying intellectual-property revenue?
  • What is the non-qualifying Revenue for the Tax Period — from Excluded Activities, from non-Qualifying Activities with Non-Free Zone Persons, and from Free Zone Persons that are not the Beneficial Recipient — with the same exclusions?

Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.

Thresholds

uae.qfzp_de_minimis_percentage
5% · reviewed 2026-09-28 · source
uae.qfzp_de_minimis_amount
AED 5,000,000 · reviewed 2026-09-28 · source

Threshold values are published separately from the rule and carried with a citation. Where none has been published for the period being computed, the rule reports that rather than applying a default.

Sources

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Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader