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Free Zone Distributors: FTA Decision No. 6 of 2026 Adds an Auditor's Report to Keep the 0% Rate
Free zone distributors claiming 0% corporate tax now need an independent auditor's agreed-upon procedures report, from tax periods starting 1 January 2026.
On 2 June 2026 the Federal Tax Authority issued Decision No. 6 of 2026. It adds compliance steps for Qualifying Free Zone Persons (QFZPs) that distribute goods or materials in or from a Designated Zone, an activity that can earn qualifying income at the 0% corporate tax rate.
The decision applies to tax periods starting on or after 1 January 2026, so for calendar-year companies it already covers the current year.
What the Decision Requires
Affected QFZPs must obtain an agreed-upon procedures (AUP) report from an independent external auditor. The decision sets out the procedures, documentation and sampling the auditor must follow. The auditor can be the company's statutory auditor or another independent auditor licensed in the UAE.
What the Report Checks
Advisers summarising the decision say the procedures test two things in particular:
- That customers buy the goods for resale, onward supply or further processing, not for their own end use
- That the goods actually entered the UAE through the Designated Zone
What the Report Does Not Do
An AUP report records factual findings. It does not certify that the company qualifies for the 0% rate, and management stays responsible for the tax position it takes.
The decision applies only to QFZPs carrying on this distribution activity, not to every free zone business.
What to Do Now
If your free zone company relies on distribution income for QFZP status, agree the AUP engagement with your auditor early, and make sure your customer records and customs documents can support the sampling the procedures require.
Frequently Asked Questions
Which free zone companies does FTA Decision No. 6 of 2026 affect?
Only Qualifying Free Zone Persons that distribute goods or materials in or from a Designated Zone. Other free zone businesses are not covered by this decision.
When does the new requirement start?
It applies to tax periods starting on or after 1 January 2026.
Sources
- PwC: UAE Corporate Tax alert for QFZP distribution activities
- Deloitte: FTA issues Decision No. 6 of 2026
This article is general information, not advice for your situation. Rules change; check the current position or speak to an advisor before acting.
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