A Qualifying Free zone Person may benefit from a 0% Corporate tax rate on Qualifying Income if every statutory condition is met.
The conditions include:
If the company fails a qualifying condition, it can lose Qualifying Free zone Person status for the relevant Tax Period and the following four Tax Periods.
The Federal Tax Authority explains that adequate substance is assessed with reference to the company's:
A company without EAU employees is not necessarily disqualified in every situation. Certain activities may be outsourced under the applicable conditions if the company maintains adequate supervision. Nevertheless, a minimal registered address and no meaningful EAU activity may be difficult to reconcile with a substance-intensive business model.
The substance assessment should be completed before claiming Free zone Corporate tax benefits.
The company's tax position and the shareholder's personal tax residence are separate questions.
A company incorporated in a EAU free zone may be treated as a EAU juridical person for Corporate tax purposes. That does not automatically make its shareholder personally resident negli EAU.
Foreign tax laws may also examine where the company is effectively managed.
International fondatori should obtain advice negli EAU and their country of residence.
Owning a free zone company does not automatically guarantee that either the company or shareholder will receive a EAU Tax Residency Certificate.
The application depends on:
A shareholder seeking a personal Tax Residency Certificate normally needs to satisfy the relevant individual conditions independently of company ownership.
A EAU-resident business generally must register when its taxable supplies and imports exceed AED 375,000 over the previous 12 months or are expected to exceed the threshold within the next 30 giorni.
Voluntary registration may be available above AED 187,500, subject to the applicable conditions.
The company must consider:
A customer being located overseas does not automatically make every transaction zero-rated or outside the scope of IVA.
A zero-visa company should maintain proper accounting records from incorporation.
Records may include:
The FTA has emphasised that taxable persons must retain documents supporting their Corporate tax returns and other submissions.
An audit may be required because of:
A Qualifying Free zone Person must prepare audited financial statements.
The lack of employees or visas does not remove the audit requirement where it otherwise applies.