Audited financial statements are a condition of Qualifying Free Zone Person status and therefore of the 0% corporate tax rate on qualifying income. The low-cost zones that historically did not require an audit closed that window between 2024 and 2026. Without audited accounts, the rate reverts to 9%.
What happened
Under Article 18 of the UAE Corporate Tax Law, read with Ministerial Decision No. 84 of 2025 and Cabinet Decisions No. 55 of 2023 and No. 100 of 2023, a free zone entity claiming the 0% rate on qualifying income must satisfy a set of cumulative conditions. Audited financial statements are one of them, alongside adequate economic substance in the free zone (real premises, staff and expenditure proportionate to the activity), income falling within the qualifying activities list of Cabinet Decision No. 100 of 2023, transfer pricing compliance, and passing the annual de-minimis test — the rule that non-qualifying revenue must stay below the lower of 5% of total revenue or AED 5 million. The low-cost zones that historically did not require audited accounts closed that window between 2024 and 2026.
What changes in practice
There is no longer a Dubai free zone that is genuinely audit-free for an actively trading company. Entities that selected a zone specifically to avoid the cost and discipline of an audit now carry an obligation they may not have budgeted for, and in many cases have not yet met for the current or prior period.
Who it applies to
Every free zone entity claiming Qualifying Free Zone Person (QFZP) status, and in particular those established in the lower-cost zones — IFZA, Meydan, SHAMS and RAKEZ among them — where the audit requirement was introduced most recently.
The exposure
Failing any single condition removes QFZP status and applies the standard 9% corporate tax rate to taxable income, with effect for the tax period concerned and consequences that carry into subsequent periods. The point most often missed is that the conditions are cumulative: audited accounts alone do not secure the rate if substance, income qualification, transfer pricing or the de-minimis test fail.
What to do now
Run a full QFZP review covering all five conditions rather than the audit alone: substance in the zone, the nature of the income against the qualifying activities list, the de-minimis calculation, transfer pricing documentation, and audited financial statements. Identify any free zone entity in the group without audited accounts for the current period and appoint an auditor now — availability tightens sharply towards filing deadlines.
Sources
- https://uaelegislation.gov.ae/en/legislations/1582
- https://tax.gov.ae/en/taxes/corporate.tax/news.aspx
Published 16 August 2026 on the basis of public sources and official United Arab Emirates instruments. This is not legal or tax advice. Verify your position with a qualified professional before acting.