Additional procedures for the application of a 0% UAE corporate tax rate by free zone persons engaged in the distribution of goods or materials

The UAE Federal Tax Authority (FTA) has published Decision No. 6 (2026) introducing new requirements for qualifying free zone persons engaged in the distribution of goods or materials in or from a designated zone. Pursuant to this Decision, to be eligible for a 0% corporate tax rate, taxpayers are required to prepare annually and submit to the tax authorities official proof of compliance with the established requirements.

The new provisions apply to tax periods starting on or after 1 January 2026.

Agreed-upon procedures report

Pursuant to the Decision, persons engaged in the qualifying activity must obtain an agreed-upon procedures report (hereinafter, the "Report") and submit it to the tax authorities no later than 30 days after the deadline for filing corporate tax returns. The Report shall be prepared in accordance with international standards and UAE legislation by an independent external auditor that is also responsible for the annual audit of financial statements or by any other independent auditor licensed in the UAE.

The Report shall document the procedures performed and the related findings demonstrating the following:

1. The qualifying free zone person supplies goods or materials to customers that resell them, or processes them for the purposes of sale or resale, and
2. Goods or materials entering the UAE are imported through a designated zone.

The Report shall be prepared on the basis of supporting documents. Therefore, free zone persons seeking to apply a 0% corporate tax rate are required to collect and retain documentation demonstrating compliance with the abovementioned criteria. Such documentation includes, but is not limited to, licenses held by customers, agreements for resale, import declarations, etc.

If a taxpayer fails to submit the Report, the eligibility criteria for qualifying income shall be considered unmet.

List of mandatory agreed-upon procedures

The following procedures must be performed to verify that a taxpayer is engaged in the qualifying activities of distribution of goods or materials in or from a designated zone:

• Inspection of a sample of trade licenses or equivalent documents held by customers
• Verification of a sample of declarations or confirmations affirming the customers' status as resellers
• Review of a sample of sales agreements, invoices and other transaction-related records to identify and document the terms or features of onward sale or resale
• Inspection of a sample of import documentation and import transactions to verify that the goods or materials were imported through a designated zone

The Decision also establishes the sampling process requirements. The Report shall be submitted along with the documents provided for its preparation.

Please note that although the Decision is enacted from 1 January 2026, the FTA may request the specified supporting documents during audits of tax returns for earlier periods.