UAE Revises Corporate Tax Rules for Free Zones

The UAE has revised its corporate tax regulations for certain free zone companies, expanding the scope of qualifying activities related to commodity trading.

According to the Ministry of Finance, the changes fall under Ministerial Decision No. 229 of 2025, which replaces Decision No. 265 of 2023. The update clarifies and broadens the definition of qualifying commodities to include industrial chemicals, environmental commodities, and by-products of qualifying materials.

The new regulation also removes the requirement that commodities be traded “in raw form,” allowing the trading of metals, minerals, chemicals, energy, and agricultural commodities, provided a quoted price is available through a recognised exchange or pricing agency.

To ensure transparency, the ministry also issued Decision No. 230 of 2025, listing recognised pricing agencies and exchanges to provide clarity for taxpayers.

Officials highlighted that free zones continue to play a vital role in driving economic growth, attracting investment, and supporting diversification in line with global tax standards.

Under the UAE’s corporate tax regime, companies with annual taxable income above Dh375,000 are subject to a 9% tax, while income below that threshold remains tax-free. Certain qualifying free zone companies can still benefit from a 0% corporate tax rate on income derived from approved activities and cross-border transactions.

The revised rules are expected to enhance clarity, compliance, and competitiveness for free zone entities engaged in trading and related business activities across the UAE.