Corporate Tax for RAKEZ Companies (2026)

For most free zone companies, qualifying income depends on who the customer is — income from transactions with other free zone persons as beneficial recipient qualifies, while mainland sales generally do not.

Qualifying Activities work differently. Where the income comes from a listed Qualifying Activity, it can qualify regardless of customer type. The list includes:

Manufacturing of goods or materials — the production, improvement or assembly of products and materials from raw materials or components.

Processing of goods or materials — the preparation, treatment, transformation or conversion of goods into another form for commercial or industrial use or sale.

Trading of Qualifying Commodities — physical trading of metals, minerals, industrial chemicals, energy and agricultural products, and associated hedging derivatives.

Distribution of goods or materials in or from a Designated Zone — subject to the goods entering the UAE through the Designated Zone.

Logistics services — storage and transportation on behalf of others without taking title, including warehousing, freight forwarding, customs brokerage and inventory management.

Plus holding companies, ship operation, reinsurance, fund and wealth management, headquarter and treasury services to related parties, and aircraft financing and leasing.

For a RAKEZ company in Al Hamra, Al Ghail or Al Hulaila producing or processing goods, this is the difference between a fragile QFZP claim and a solid one. A factory selling to mainland UAE customers is not automatically outside the 0% regime the way a consultancy would be.

The Qualifying Activity is one condition, not the whole test. All five must hold:

1. Qualifying income — from the activities above, or from free zone persons as beneficial recipient.

2. Adequate substance in the free zone — for an industrial company with a facility, staff and plant in RAKEZ, this is usually the easiest condition to satisfy, unlike flexi-desk operators elsewhere Meydan →.

3. Audited financial statements — mandatory at any revenue for a QFZP audited financial statements requirement →.

4. Transfer pricing compliance — particularly relevant where a RAKEZ manufacturer supplies related entities transfer pricing requirements →.

5. De minimis — non-qualifying revenue no more than the lower of 5% of total revenue or AED 5 million.

Fail one and the 0% rate is lost for that tax period and the four that follow /tax/guides/free-zone-corporate-tax-qualifying-income →.

Manufacturers often have secondary income streams that are not qualifying: subletting spare warehouse space, selling scrap or by-products to mainland buyers, one-off equipment sales, or service work for local customers.

Individually these look immaterial. Against the de minimis test they are not, because the limit is the lower of 5% of total revenue or AED 5 million — and it is total non-qualifying revenue that counts, not any single stream. A RAKEZ manufacturer with AED 30 million of revenue has a ceiling of AED 1.5 million, and crossing it ends QFZP status entirely, not just for the excess.

Track non-qualifying revenue during the year, not at year end when nothing can be done about it.

The distribution Qualifying Activity applies to goods distributed in or from a Designated Zone, where goods entering the UAE are imported through that Designated Zone. Designated Zone status is a specific VAT designation and not every free zone location holds it. If your RAKEZ operation relies on the distribution activity rather than manufacturing, confirm the designation for your specific zone before assuming the income qualifies.

RAKEZ also hosts a large number of small service and trading companies for whom none of the above applies. For them the position is the same as any small free zone entity: a Qualifying Free Zone Person cannot claim Small Business Relief, so with revenue at or below AED 3 million the choice is between a QFZP claim requiring an audit and evidenced substance, or Small Business Relief with simplified compliance for periods ending on or before 31 December 2026 Small Business Relief →.

RAKEZ accepts audits from UAE-licensed audit firms rather than operating a closed approved-auditor panel like DMCC → or DIFC, but statements must be IFRS-compliant for FTA purposes. Note that QFZPs have been required to maintain audited financial statements for tax periods commencing on or after 1 June 2023 — earlier than the general Ministerial Decision No. 84 of 2025 timeline.

Corporate tax deadlines are federal: the return and payment are due within 9 months of the financial year end — 30 September 2026 for a 31 December 2025 year end deadline checker →.