Dubai, UAE – Businesses involved in the distribution of goods within or from UAE-designated free zones will soon receive new guidance on corporate tax regulations. The Federal Tax Authority (FTA) is set to release updates aimed at helping these companies navigate the 0% corporate tax benefit with greater certainty. The UAE Ministry of Finance also announced changes to how tax groups should handle their financial statements under the updated tax law framework.
The UAE’s corporate tax system offers a 0% tax rate on qualifying income from designated free zones, a significant incentive for many regional and international businesses. However, companies operating in distribution—especially those handling the movement of goods across free zones—have been seeking clarity on how the regime applies to them.
To address this, the Ministry of Finance recently issued a Ministerial Decision introducing “clarifying procedures for qualifying free zone” businesses. This decision outlines the preparation and maintenance requirements for audited financial statements in line with the UAE’s corporate tax law, particularly for businesses that wish to retain the benefits of the tax-free status.
Importantly, the Ministry noted that all tax groups will now be required to prepare audited special purpose aggregated financial statements. This approach ensures compliance while also streamlining administrative demands.
“To mitigate the compliance burden on tax groups and in line with the UAE’s commitment as a business-friendly jurisdiction, the underlying members of the tax group will not be required to prepare audited stand-alone financial statements,”
said a statement from the Ministry of Finance.
The FTA will issue additional guidance on how these special purpose aggregated financial statements should be prepared, allowing businesses to align with tax requirements more efficiently and with less ambiguity.
This move reflects the UAE’s broader objective to maintain a competitive, transparent, and business-friendly environment, while aligning its tax practices with global standards.
With the anticipated guidance from the FTA, distribution businesses operating from UAE free zones are expected to gain much-needed clarity on corporate tax compliance. The updated financial reporting requirements for tax groups also underscore the country’s dual priorities of fiscal transparency and ease of doing business. Stakeholders are advised to stay informed of forthcoming updates from the FTA for full compliance and continued tax benefits.For further updates, follow the Federal Tax Authority website and the UAE Ministry of Finance portal.
Explore expert business setup and tax advisory services in the UAE at IBGME — your trusted partner for success.
