Legal Update ยท UAE Corporate Tax
Free Zone Corporate Tax: substance before tax promises.
A UAE Free Zone structure is not automatically tax-preferred. Status, activity, income, substance, transfer pricing and documentation must be aligned.
Why it matters
The practical question is not only whether an entity is registered in a Free Zone. The activity, income stream, substance and documentation must support the intended tax position.
Review points
- Which entity earns which income and from which activity?
- Where are decisions, people, costs and records actually located?
- Are related-party services and prices documented on an arm's length basis?
- Could non-qualifying income, excluded activities or thresholds affect the position?