The United Arab Emirates has been charting the course for global economies to follow. The forward-thinking approach was clearly evident when it launched its first free zone in Jebel Ali Port in Dubai back in 1985. Today, the country is home to over 40 free zones across the seven emirates that attract attention from global investors, innovators and traders to actively take part in its national economy. With the global market evolving, the UAE ushered in several initiatives to help maintain its competitive edge.
The introduction of Corporate Tax in the UAE was one such initiative. The free zones today are fertile ecosystems that continue to evolve.
The recent announcement by the Federal Tax Authority (FTA) regarding the Corporate Tax Law further underscores its efforts to strengthen the integrity of the incentives while ensuring greater emphasis on transparency and compliance.
In line with this vision, the FTA recently issued Decision No. 6 of 2026 that introduces ancillary compliance procedures for Qualifying Free Zone Distributors in the UAE. While this does not have a direct impact on the 0% Corporate Tax rate benefit, this announcement is an important step in reinforcing a tax environment that ensures transparent reporting, working in tandem with the regulatory requirements to further strengthen investor confidence.
About Corporate Tax
Who Does This Decision Apply To
While the decision applies to Qualified Free Zone Persons (QFZPs) who are undertaking the distribution of goods or materials in or from a designated zone. Regardless, this decision does not encompass all the organisations that are operating within the free zones.
This decision enables businesses to take a closer look at their operations, supply chain arrangements, business activities and other business activities to ascertain whether they fall under the scope of this decision. Enterprises that are counting on their qualifying distribution activities to maintain their preferential Corporate Tax treatment will now have to demonstrate compliance through stronger controls and supporting evidence.
Corporate Tax Preparation
AUP Report: A New Compliance Requirement
One of the key changes introduced under FTA Decision No. 6 of 2026 is the requirement for an independent Agreed-Upon Procedures (AUP) Report.
Unlike an ordinary statutory audit, the AUP report and engagement will not have an audit opinion. It would rather have an independent audit consultant or auditor vouch for the factual findings as per the evidence. This report would further agree upon the necessary procedures and levers that the auditor would review. This requirement opens the doors for greater transparency and accountability over the distribution activities rendered by the organisation while keeping its operations in line with the conditions necessary for the qualified free zone person treatment.
While applicable for the tax period on or after January 1, 2025, the requirement ensures that the focus remains on year-round preparedness. Most companies still collect the necessary documents at the time of filing for the Corporate Tax return, this requirement will drive them to establish processes that would move away from the last-minute hustle. Further enabling the organisations to stay compliant through accurate and well-maintained documentation much before the deadline for corporate tax filing and review.
Corporate Tax Declaration
Why Early Preparation Matters
The introduction of the AUP requirement directs the spotlight on the growing importance of maintaining accurate and complete records throughout the financial year. Noting that the last-minute hassle for accurate documentation can often overlook gaps that could cause potential exposure and penalties at the time of filing.
The decision is a step to help businesses avoid that pothole in their compliance journey. By maintaining the records that would be a true representation of a company’s corporate lifecycle and their distribution activities. The records would often include documents related to the acquisition of goods, movement of inventory, customer arrangements, and sale of goods to eligible counterparties.
For the firms and business leaders that are directly impacted by this announcement, this provides an opportunity to cross-verify and review the existing mechanisms and controls that are in place. A thorough review during this process often helps founders and entrepreneurs identify potential gaps well before the deadline for Corporate Tax filing.
Through a proactive approach, businesses can trim future compliance concerns while providing greater confidence in maintaining the Qualifying Free Zone Person (QFZP) status.
Final Words
FTA Decision No. 6 of 2026 marks another step in the UAE's ongoing efforts to strengthen its Corporate Tax framework while preserving the integrity of its free zone tax regime. With the regulatory expectation evolving, businesses are now expected to meet the qualifying criteria while also attesting to the facts through consistent operational practices and supporting evidence.
For organisations that are operating in the free zones, this move presents an opportunity to further enhance their reporting and compliance frameworks before the new requirements are implemented.
At Excellence Auditing & Business Consultants, we support companies in the UAE with our corporate tax services, providing clarity and consistency throughout the process. Our corporate tax specialists work closely with leaders to maintain regulatory alignment, strengthen financial discipline, and provide the confidence needed to grow steadily within the UAE market.
