Answer:
Yes. A Free Zone Person that meets all the conditions to be treated as a Qualifying Free Zone Person (QFZP) will automatically benefit from the 0% Corporate Tax rate on its Qualifying Income. (Article 18 of Federal Decree-Law No. 47 of 2022)
Application Rule:
• The 0% rate is granted automatically to Free Zone entities that qualify as QFZPs.
• A QFZP may voluntarily opt out of the 0% regime and choose to be taxed under the regular Corporate Tax regime (9%) by making an election under Article 19.
• Once elected, the regular tax regime will apply to all income of the Free Zone Person, and it will no longer benefit from the Free Zone regime.
Example:
A Free Zone company that:
• Maintains adequate economic substance in the UAE,
• Earns income only from holding shares and providing treasury services to related parties,
• Meets all the requirements under Article 18, will automatically benefit from the 0% Corporate Tax rate.