UAE Free Zone

Independent guide. Not affiliated with any UAE government authority or free zone.

Does a small free zone company need an audit for 0% tax?

Under Ministerial Decision 84 of 2025, every Qualifying Free Zone Person needs audited accounts at any size. What QFZP means and what happens if you fail.

UAE Free Zone editorial desk Published 23 October 2026 10 sources, checked 23 October 2026 6 min read

Yes. If you want 0% corporate tax as a Qualifying Free Zone Person (QFZP), you must prepare audited financial statements, however small your company is. Ministerial Decision No. 84 of 2025 lists every QFZP as needing audited accounts, with no revenue threshold. Skip the audit and you fail a QFZP condition, which can mean 9% tax for five tax periods.

What is a Qualifying Free Zone Person?

A QFZP is a company or branch registered in a UAE free zone that meets a set of conditions under the corporate tax law. If it meets them all, it pays 0% on its qualifying income. Other income is taxed at 9% (PwC).

Being in a free zone does not make you a QFZP by itself. A licence from DMCC, IFZA, Meydan, RAKEZ, SHAMS, SPC or any other zone is only the starting point. You must meet the conditions every tax period.

The Federal Tax Authority (FTA) explains the regime in its Corporate Tax Guide on Free Zone Persons, published in May 2024. This site is independent and is not linked to the FTA, the Ministry of Finance or any free zone.

What are the conditions to keep 0% tax?

Based on PwC's summary and DLA Piper's note on the FTA guide, you must:

  1. Be a free zone person. A legal entity incorporated or registered in a free zone, including a branch.
  2. Keep adequate substance in the free zone. Your core income-earning work, staff, assets and spending need to be in the free zone.
  3. Earn qualifying income. Broadly, income from other free zone persons, or from qualifying activities, or from qualifying IP.
  4. Pass the de minimis test. Non-qualifying revenue must stay below the lower of 5% of total revenue or AED 5 million. See our de minimis rule examples.
  5. Follow transfer pricing rules. Deals with related parties must be at arm's length, with documents where required.
  6. Not elect into the standard regime.
  7. Prepare audited financial statements. This is the condition MD 84/2025 confirms.

The list of qualifying and excluded activities now sits in Ministerial Decision No. 229 of 2025, which replaced the 2023 version. KPMG notes it applies back to 1 June 2023 and widens some activities, such as commodity trading.

What does Ministerial Decision 84 of 2025 actually say?

MD 84/2025 was issued by the Ministry of Finance on 25 March 2025. It sets out who must keep audited financial statements for corporate tax. Article 2 names two groups that are not tax groups:

  • A taxable person with revenue above AED 50 million.
  • A Qualifying Free Zone Person, with no revenue test.

Tax groups have a separate rule. They must prepare audited special purpose financial statements.

The decision applies to tax periods starting on or after 1 January 2025. It repealed the earlier rule, Ministerial Decision No. 82 of 2023, which still applies to earlier periods. KPMG says the audit rule for QFZPs did not change between the two decisions. In other words, the audit requirement for QFZPs is not new. MD 84/2025 restates it.

PwC adds that QFZPs distributing goods in or from a Designated Zone face extra procedures, still to be set by the FTA.

So does my small free zone company need an audit?

It depends on whether you want to be treated as a QFZP.

Your situation Audit needed for corporate tax?
Free zone company claiming QFZP status (0% on qualifying income) Yes, at any revenue
Free zone company not claiming QFZP status, revenue AED 50m or less Not under MD 84/2025
Any taxable person (not a tax group) with revenue above AED 50m Yes
Member of a tax group Group prepares audited special purpose statements

Your free zone authority may have its own audit rules for licence renewal, separate from corporate tax. Ask your zone.

Does a company with no revenue need an audit?

DLA Piper notes that the FTA guide says a new company with no revenue yet is not disqualified just for having no qualifying income. MD 84/2025 still lists QFZPs without any revenue floor. If you plan to claim QFZP status for that year, ask your tax agent whether you need audited accounts for it.

Is the audit worth it for a small company? A worked example

This is where small companies need to do the maths. Outside the QFZP regime, the standard regime taxes the first AED 375,000 of taxable income at 0% and the rest at 9%. A QFZP's 9% income does not get that band, according to Meydan Free Zone.

Assume all income would be qualifying income if you were a QFZP. Assume an audit fee of AED 15,000. That fee is our illustrative guess, not a quoted price. Get real quotes.

Taxable profit (AED) Tax as QFZP Audit cost QFZP total Tax under standard regime (no audit) Cheaper option
200,000 0 15,000 15,000 0 Standard
375,000 0 15,000 15,000 0 Standard
600,000 0 15,000 15,000 20,250 QFZP
2,000,000 0 15,000 15,000 146,250 QFZP

Standard regime tax is 9% of profit above AED 375,000. For example, (600,000 − 375,000) × 9% = 20,250.

The table shows a simple pattern. If your profit is under AED 375,000, the audit may cost more than the tax it saves. Above that, the audit usually pays for itself, provided you meet every other condition.

Two warnings. First, electing out of the QFZP regime is not a one-year choice. DLA Piper notes that an election ends QFZP status for that period and the four after it. Second, the table ignores accountancy fees and non-qualifying income, which would change the answer.

Can I use Small Business Relief instead?

Not as a QFZP. The FTA's Small Business Relief page says QFZPs cannot elect it. The relief is for businesses with revenue of AED 3 million or less in the current and all earlier tax periods. A free zone company that is not a QFZP may be able to use it, if it meets the conditions.

What happens if you don't get an audit?

Audited accounts are one of the QFZP conditions. If you fail any condition, PwC says you are treated as a standard taxable person for that tax period and the next four. That is five tax periods in total at the standard rates. You can test for QFZP status again in the sixth.

Using the table above, a company with AED 2,000,000 of profit each year would move from 0% to about AED 146,250 a year. Over five years that is roughly AED 731,250 in tax, before any penalties.

When do the audited accounts need to be ready?

Corporate tax returns are due within nine months of the end of the tax period, according to the FTA. For a 31 December year end, that means 30 September the following year. Book your auditor well before then.

What else should a small QFZP watch?

  • Selling to individuals. Transactions with natural persons are generally excluded activities, so that revenue counts against your de minimis limit.
  • Mainland customers. Income from mainland clients is usually non-qualifying unless it comes from a qualifying activity. If you plan to work on the Dubai mainland, read our guide to the mainland operating permit.
  • E-invoicing. Free zone companies are not exempt. See e-invoicing for free zone companies.
  • Budgeting. Include the audit in your running costs. Our year-one cost guide shows the other fees.

What to check before you act

  1. Speak to an FTA-registered tax agent about whether you meet every QFZP condition, not just the audit.
  2. Read the FTA's Free Zone Persons guide for the examples that match your business.
  3. Get two or three audit quotes from UAE-licensed auditors and compare them with your likely tax.
  4. Ask your free zone authority whether it needs audited accounts for licence renewal anyway.
  5. Model the de minimis test using your real revenue split before your year end.
  6. Think hard before electing out. The choice can bind you for five tax periods.
  7. Diary your deadline, nine months after your year end, and work back to set your audit date.

This page is general information, not tax advice. It does not promise 0% tax or any other outcome.

Before you pay a setup agent

  • Ask for the full year-one quote in writing: licence, desk, establishment card, each visa, medicals and Emirates ID.
  • Ask which exact activity name goes on your licence and check it covers what you will invoice for.
  • Ask whether the agent is paid by the zone, and whether a bank account is included or only an introduction.
  • Check the zone's own price page before you sign. We link to it on every zone profile.

General information only, not legal, tax or immigration advice. Free zone fees and rules change; confirm the current figures with the free zone authority before you commit. Spotted something out of date? Tell us.

Sources