A New Era of Clarity: How Ministerial Decision No. 229 of 2025 Empowers UAE Free Zone Businesses
In the UAE, the business landscape is well known for its flexibility and forward-thinking regulations. With this rapid development, the Ministry of Finance (MoF) has issued Ministerial Decision No. 229 of 2025, which is a major update in the UAE Corporate Tax Law. Under the previous Ministerial Decision No. 265 of 2023, there were several ambiguities, and this new decision directly clarifies all those ambiguities. This decision brings a new level of certainty for those companies functioning as Qualifying Freezone Persons (QFZP), particularly for those in trading, logistics and inter-company financing sectors.
This blog details the core benefits of Ministerial Decision No. 229 of 2025, including how it simplifies and strengthens the legal framework for three critical business activities.
1. A Game-Changer for Commodity Trading: From Ambiguity to Certainty
The most significant and welcoming change brought by Ministerial Decision No. 229 of 2025 was in its dramatic approach to the Trading of Qualifying Commodities. Under the previous decision framework, MD 265 of 2023, it was clarified that to qualify for the benefit of 0% Corporate Tax, the commodities must be in their raw form. This provision created huge confusion and ambiguity for businesses engaged in the trading of commodities. The term raw was not defined properly, which leads to uncertainty on whether basic processing or handling would disqualify a commodity.
This ambiguity got completely removed with the Ministerial Decision No. 229 of 2025. It abolishes the "raw form" requirement and introduces a new, clear, and globally aligned term. A commodity is considered qualifying if it has a Quoted Price. A Quoted Price is defined as a price set by a Recognised Commodity Exchange Market or a Recognised Price Reporting Agency. This objective, verifiable standard provides businesses with a definitive way to determine whether their trading activities are eligible for the preferential tax rate.
Furthermore, the new decision elaborates on the scope of what constitutes a Qualifying Commodity, which includes:
➤ Industrial Chemicals and Associated By-products: Addressing the realities of modern manufacturing and trading businesses, the decision now explicitly includes these items, providing much-needed relief and clarity for chemical and industrial businesses.
➤ Environmental Commodities: The new rules explicitly recognise the trading of assets like carbon credits and renewable energy certificates, thereby positioning the UAE as a leader in the global green economy.
➤ Structured Commodity Financing: This new decision elaborates on the definition of qualifying activities, now covering related financing activities like prepayment and project finance
This single change provides a clear route for commodity traders, giving them more confidence to structure their operations in the UAE without the fear of losing their QFZP status due to an unclear definition. It represents a significant improvement over the previous regime.
2. Streamlining Inter-Company Finance: Clarity for Treasury Activities
Under the previous Ministerial decision, the clarity on how QFZP could conduct treasury and financing activities with its related parties was not defined properly. These activities will fall under the purview of Qualifying activities as per the general understanding, but there was an uncertainty due to a lack of exact details.
Ministerial Decision No. 229 of 2025 addresses this issue by providing a more detailed framework for Treasury and Financing Services with Related Parties. The decision confirms that these activities are a Qualifying Activity, provided that they meet the specific criteria mentioned. This clarification is a significant help for multinational corporations that centralise their treasury functions within a UAE Free Zone. It gives them the guarantee that their inter-company loans, cash pooling and other financing arrangements can be structured in that way, enabling them to get the benefit from the 0 per cent Corporate Tax rate.
This explicit inclusion is a testament to the UAE's commitment to attracting and retaining multinational corporations' regional headquarters and group treasury centres. It eliminates a layer of legal and tax ambiguity, allowing businesses to operate with greater certainty and efficiency.
3. A Robust Framework for Global Logistics and Distribution
For businesses engaged in the movement of goods, Ministerial Decision No. 229 of 2025 provides crucial clarification on the distribution of goods or materials. The decision makes detailed that this activity qualifies for 0% Corporate tax when conducted in or from a Designated Zone. This decision is beneficial for the companies that use the UAE Free Zones as a hub for their regional or global logistics operations.
This provision confirms that:
➤ Wholesale and Retail: A QFZP can engage in the business of distribution of goods from a Designated Free Zone to either other Free Zone Persons or to the mainland companies, which will qualify for 0% corporate tax rate
➤ Logistics Services: The decision provides a clear definition of what services are covered under logistics services, which include warehousing, inventory management, goods handling, and order fulfilment.
➤ Supply Chain Integration: For businesses that have integrated their supply chain, from the process of manufacturing until distribution, the decision provides a clear path to maintain their status as QFZP.
This new detailed guidance is really an improvement over the previous general provisions under the UAE corporate tax Law, enabling businesses a stronger foundation for planning their supply chain strategies within the UAE. It encourages greater use of the country's world-class logistics infrastructure.
The Call to Action: Navigating the New Landscape
Ministerial Decision No. 229 of 2025 is a strategic update that empowers businesses by replacing ambiguity with certainty on the definitions. By clearly defining and elaborating on the scope of qualifying activities in trading, treasury, and distribution businesses, it strengthens the UAE's position as a leading global business hub.
However, with this latest Ministerial Decision’s there comes the critical responsibility in the compliance part. The decision also reconfirms the need for QFZPs to adhere to the provisions of the De Minimis Rule and to prepare and maintain the audited financial statements. As per the retroactive application of these rules from June 1, 2023, businesses must act without any delay.
To ensure your company gets full benefits from these new Corporate Tax provisions and to remain compliant, it is inevitable to conduct a detailed review of your business operations and tax position. For ensuring expert guidance and timely advice on navigating this new tax landscape, contact a qualified tax advisor today
To learn more about UAE Free Zone Tax: Ministerial Decision 229 of 2025 Explained, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.