The Free Zone regime sits at the centre of UAE Corporate Tax planning, and the qualifying activities list is the spine of the regime. Two years after the introduction of Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 265 of 2023, the operational shape of the rules is now clearer, but the practical task - keeping a client's revenue mix inside the qualifying envelope - has not become easier.
This guide is a working reference for the 2026 list. It sets out the qualifying activities, the excluded activities, the operation of the de minimis rule, the common revenue-classification errors we see in client files, and the documentation a firm should keep on file per Free Zone client to defend the 0% rate in a future review.
Where the list actually lives
The qualifying activities and excluded activities are set out in Cabinet Decision No. 100 of 2023 and elaborated by Ministerial Decision No. 265 of 2023. The FTA has issued public clarifications since, the most consequential of which deal with distribution of goods from a Designated Zone, ownership and exploitation of intellectual property, and the treatment of headquarter services.
A common error is to rely on a single Free Zone authority's marketing material as the source of truth. The Free Zone authorities do not write the qualifying activities list - the Ministry of Finance does. Always work from the published Cabinet and Ministerial Decisions, with the FTA clarifications as the interpretive overlay.
The qualifying activities - 2026 working list
The activities that can generate qualifying income, when conducted by a Qualifying Free Zone Person with the necessary substance, broadly include:
- Manufacturing of goods or materials
- Processing of goods or materials
- Trading of qualifying commodities (defined narrowly - primarily metals, minerals, energy and agricultural commodities traded on a recognised exchange)
- Holding of shares and other securities for investment purposes (subject to the holding-period and minimum-ownership conditions)
- Ownership, management and operation of ships
- Reinsurance services (regulated)
- Fund management services (regulated)
- Wealth and investment management services (regulated)
- Headquarter services to related parties
- Treasury and financing services to related parties
- Financing and leasing of aircraft, including engines and rotable components
- Distribution of goods or materials in or from a Designated Zone
- Logistics services
- Ancillary activities to any of the above, where genuinely ancillary
The excluded activities - what taints the regime
Excluded activities are the mirror image. Income from an excluded activity is non-qualifying income, and beyond the de minimis threshold it disqualifies the entity from Qualifying Free Zone Person status for the period. The excluded activities are:
- Any transactions with natural persons, except for specific carved-out activities (including ownership of ships, fund management, wealth management, financing and leasing of aircraft)
- Banking activities (regulated)
- Insurance activities, other than reinsurance
- Finance and leasing activities, other than treasury and financing services to related parties and aircraft financing and leasing
- Ownership or exploitation of immovable property, other than commercial property located in a Free Zone where the transaction is with another Free Zone person
- Ownership or exploitation of intellectual property assets, except for qualifying intellectual property under the narrow patent-style regime in the Ministerial Decision
The de minimis rule - how the maths actually works
The de minimis rule allows a Qualifying Free Zone Person to earn a limited amount of non-qualifying revenue without losing qualifying status. The threshold is the lower of AED 5 million or 5% of total revenue. Both limbs apply - exceed either one and the regime is lost for the entire period.
The denominator is total revenue, not just non-qualifying revenue, and certain items are excluded from both the numerator and the denominator (revenue attributable to a domestic or foreign PE, immovable property income that has been separately taxed at 9%, and revenue from qualifying intellectual property). Run the de minimis calculation at each quarter as well as at year-end - by the time the year-end calculation reveals a breach, the corrective options are usually limited.
What counts as a transaction with a natural person
The single most contentious area in 2025 reviews was the natural-person exclusion. A transaction with a natural person is, by default, excluded - meaning a Free Zone entity selling consumer goods to UAE residents online, providing professional services to individuals, or running a B2C platform is largely outside the qualifying regime.
The carve-outs are narrow. Ownership and operation of ships, regulated fund management, regulated wealth and investment management, financing and leasing of aircraft, and ownership of certain qualifying intellectual property are the activities where transactions with natural persons can still be qualifying. For most B2C operating businesses in Free Zones, the practical answer is that B2C revenue is non-qualifying revenue and must sit inside the de minimis envelope.
Immovable property and the Free Zone boundary
Income from immovable property is excluded unless the property is commercial property located in a Free Zone and the transaction is with another Free Zone person. Residential property income in a Free Zone is excluded. Commercial property income from a tenant outside the Free Zone is taxed at 9% on the property income (with the underlying entity remaining a Qualifying Free Zone Person on its other income).
For mixed-use clients - a Free Zone entity that owns a tower with both office and residential floors - the apportionment work is meaningful. Document the floor-by-floor or unit-by-unit split and the basis of allocation, because the FTA expects the taxpayer to evidence the boundary rather than the regulator to investigate it.
Intellectual property - the narrow qualifying gate
Income from qualifying intellectual property can be qualifying income, but the definition is narrow. Qualifying intellectual property broadly covers patents and copyrighted software, and the qualifying income is calculated under a modified nexus approach that ties the qualifying portion to qualifying R&D expenditure incurred by the entity itself.
Trademarks, marketing intangibles, and most non-patent IP do not qualify. A Free Zone client that earns the bulk of its revenue from licensing a brand or trademark is, in practice, outside the qualifying regime for that income stream - a fact that often surfaces only when the firm sits down to prepare the return.
Substance is part of the qualifying test
A Free Zone entity does not earn qualifying income simply by being licensed in a Free Zone. The entity must maintain adequate substance - people, assets, and operating expenditure - in the Free Zone, relative to the core income-generating activities, and must conduct those activities in the Free Zone.
For a holding company, this means real directors making real decisions from the Free Zone. For a manufacturing entity, it means real production capacity in the Free Zone. For a headquarter-services entity, it means real headquarter functions performed in the Free Zone by people on residence visas. Outsourcing to a related party within the same Free Zone or to another Free Zone is permitted, with conditions, but outsourcing to an unrelated mainland or offshore provider does not preserve substance.
Common revenue-classification errors
Across the Free Zone files we have reviewed, the same handful of classification errors come up repeatedly:
- Distribution revenue classified as qualifying where the underlying delivery did not pass through a Designated Zone
- Headquarter services to non-related parties (e.g. portfolio companies that do not meet the related-party test) treated as qualifying
- Software licence income treated as qualifying IP income where the underlying nexus expenditure cannot be evidenced
- B2C revenue not separately tracked because the operations team did not understand the distinction
- Commercial property income from non-Free-Zone tenants left inside the qualifying calculation, breaching de minimis
What to keep on file per Free Zone client
A defensible Free Zone file should include, for each tax period, a memo on substance, a revenue-by-activity schedule mapped against the qualifying activities list, the de minimis calculation with both limbs shown, the audited financial statements, and the transfer pricing documentation supporting any related-party qualifying income. A short partner sign-off cover sheet that records the conclusion on qualifying status, with reference to the underlying papers, is invaluable in a future review.
How Accupe helps
Accupe is the firm-side workspace where this evidence sits. Smart Boards govern the quarterly substance and de minimis review per Free Zone client, the encrypted client portal keeps the supporting documents in one place, AI document analysis with source citation accelerates the review of revenue ledgers, and the Compliance Radar surfaces any Free Zone client where the de minimis position is at amber. Accupe does not compute Free Zone tax or file the return - your filing tool and the EmaraTax portal do that - but it is the layer that lets a firm prove the qualifying conclusion two years later.