In free zones, resident businesses can be either non-juridical persons or juridical persons. Non-juridical persons earning up to Dh1 million in a year are exempt from corporate tax. If revenue exceeds Dh3 million, they must register for corporate tax with a nine percent tax rate. Juridical persons in free zones must register for corporate tax as qualifying free zone persons (QFZP) and meet specific conditions to maintain this status. They are subject to either zero or nine percent tax rates, with no small business relief.
QFZPs can have exempt, standard-rated, qualifying, or non-qualifying revenue. Exempt revenue includes foreign PE revenue and dividends from resident juridical persons. Standard-rated revenue is subject to a nine percent tax rate. Non-qualifying revenue should not exceed five percent of net revenue or Dh5 million. Qualifying revenue comes from transactions with free zone persons, qualifying activities, and income below a certain threshold.
All businesses, including non-juridical and juridical persons, are required to register for corporate tax, except non-juridical persons with revenue below Dh1 million. The article emphasizes the importance of understanding the tax implications for free zone businesses. It also highlights the expertise of the writer, who is a managing partner at Kress Cooper Management Consultants and provides contact information for further inquiries or clarifications. The content serves as a valuable resource for individuals seeking clarity on corporate tax requirements within free zones.
