HLB HAMT Talks: Navigating the 0% Tax Advantage for Free Zone Companies

February 8, 2024

HLB HAMT - Accounting Firm in UAE

Phone:- +971 4 327 7775
WhatsApp:- +971 56 219 1607
Email:- dubai@hlbhamt.com

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    The introduction of the UAE corporate tax law has caused uncertainty for free zone companies, which previously enjoyed a 0% tax advantage. This talk by HLB HAMT clarifies the conditions necessary for free zone companies to maintain their 0% tax status and offers insights into navigating the new regulations.

    To qualify for the 0% tax advantage, free zone companies must meet four key conditions which is stated in the law:

    1. Understanding Adequate Substance

      The level of required substance varies depending on company size, industry, and revenue. Key factors include:

      • Adequate qualified and experienced staff
      • A physical Office Space
      • Incurring operating expenditure aligned with core income-generating activities.
    2. Earning a Qualifying Income

      Carefully assess your customer base whether a free zone person or non-free zone person to determine if your income qualifies for the 0% tax rate.

    3. Transfer Pricing Compliance

      Free zone companies conducting transactions with related parties must comply with arm’s length principle and prepare transfer pricing documentation as per UAE regulations.

    4. De Minimis Requirement

      Closely monitor your non-qualifying income to ensure it stays below the de minimis threshold to avoid losing the “Qualifying Free Zone Person” status and its associated tax benefits.


    Corporate tax landscape for free zone companies demands a nuanced understanding of conditions and compliance. To gain a deeper insight into your specific situation, we invite you to connect with our experts at tax@hlbhamt.com. Our team at HLB HAMT is committed to helping you navigate the complexities of UA corporate tax, ensuring your company maximizes its tax advantage while staying in compliance with the regulations.

    HLB HAMT’s experienced professionals can guide your free zone company through this process and help you achieve optimal tax efficiency. For personalized guidance and in-depth insights, contact HLB HAMT today.

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