December 21, 2022Dated: | Byadmin admin | 01. In order to get a Corporate Tax benefit, Free Zone Company must be a Qualifying Free Zone person. Who is a Qualifying Free Zone person? Those Free zone companies who are having adequate substance in the UAE. The details of adequate substance have not yet been clarified in the Law. From the Economic Substance Regulation, we can make an understanding of the demonstration of substance in the UAE through Office space, Full time and part-time employees, assets in the country, etc. However, we have to wait for further clarifications from the Authorities. Free Zone companies who are deriving Qualifying Income. The details of Qualifying Income will be published through Cabinet Decision in the due course. If we read the Public Consultation Document, which is issued on 28th April 2022, the Free Zone person who receives any mainland sourced income, except passive income from mainland companies, will disqualify from the 0% tax eligibility. However, In the Corporate Tax Law published recently, it is clarified that a qualifying free zone person will be taxed as below:-0% on the Qualifying Income.9% on the Non-Qualifying Income. Free Zone person who has not been elected to be subject to Corporate Tax. A qualified Free Zone person who is having 0% qualifying income can voluntarily elect to be subject to 9% Corporate Tax. In case of any related party and connected person transactions by the Free Zone person, the authority may ask the taxable person to submit the disclosure containing information regarding the transaction between the related party and connected person. Any such transaction or arrangement must be on Arm’s Length Price and the Transfer Pricing Document must be maintained by the Free Zone person if meet the conditions prescribed by the Minister. Free Zone person who meets any other conditions as may be prescribed by the Ministry of Finance.