The QFZP AUP Report: What Free Zone Distributors Must Do Under FTA Decision No. 6 of 2026

If your free zone company distributes goods in or from a Designated Zone and relies on the 0% corporate tax rate, you now need a QFZP AUP report. FTA Decision No. 6 of 2026 requires Qualifying Free Zone Persons (QFZPs) that carry out this activity to obtain an Agreed-Upon Procedures report from an independent auditor. It applies to tax periods starting on or after 1 January 2026. Missing it can cost the distribution income its 0% treatment.

This guide explains who is caught, what the auditor will test, the documents you should be collecting now and how the deadline works.

What is the QFZP AUP report?

An Agreed-Upon Procedures (AUP) engagement is not an audit opinion. The auditor performs specific checks that the Federal Tax Authority (FTA) has prescribed and reports the factual findings. The FTA then uses those findings to judge whether the distribution conditions were met.

The Decision builds on Clause 3 of Article 2 of Ministerial Decision No. 84 of 2025, which sets the conditions for distribution of goods or materials in or from a Designated Zone to count as a qualifying activity. The report must be prepared under International Standard on Related Services (ISRS) 4400, Agreed-Upon Procedures Engagements, and the auditing rules that apply in the UAE.

The auditor can be your statutory auditor or any other independent auditor licensed in the UAE.

Who needs a QFZP AUP report?

The requirement is narrow, and that matters. It applies only where all of these are true:

1. You are a Qualifying Free Zone Person (or intend to be treated as one) for the tax period.
2. You earn income from distributing goods or materials in or from a Designated Zone.
3. You treat that distribution income as qualifying income at 0%.

A free zone consultancy, software house or holding company with no Designated Zone distribution is not caught by this Decision. A mainland company is not caught either. A trading company in a Designated Zone that sells to end consumers is in a different position: sales to non-resellers generally fall outside the qualifying distribution activity in the first place.

If you are unsure whether your zone is a Designated Zone for corporate tax purposes, check the current Cabinet list before you plan the engagement. Not every free zone is a Designated Zone.

What the auditor will test

The Decision sets out two conditions the AUP report must cover.

1. Reseller status of your customers

The report must show that customers buy the goods for resale, for onward supply, or to process or alter them for sale. Expect the auditor to inspect:

• customers' valid trade, business or commercial licences, or equivalent documents
• signed customer declarations or written confirmations of reseller status
• sales agreements, purchase orders and invoices that show the reseller relationship

2. Importation through a Designated Zone

The report must show that goods entering the UAE came in through a Designated Zone. The auditor will look for:

• import declarations and customs clearance documents
• bills of lading, airway bills or equivalent transport documents that show entry through the Designated Zone
• evidence that the zone holds Designated Zone status

Sampling is prescribed, not left to judgement

The FTA has fixed the sampling method. The sample size is set by a formula based on the population of relevant transactions with a 10% margin of error:

Sample size = population ÷ [1 + (population × 10%²)]

The sample must also include the highest-value transactions in the period. In practice, your largest customers and largest import shipments will be tested every year. If their files are weak, the report will say so.

When is the QFZP AUP report due?

The report must reach the FTA no later than 30 days after the deadline for filing the corporate tax return for the relevant period, unless the FTA sets another date.

A corporate tax return is due within nine months of the end of the tax period. For a company with a 31 December 2026 year-end, the return is due by 30 September 2027 and the AUP report by 30 October 2027. That looks distant, but the documents the auditor will test are being created now, in every sale and import you make during 2026.

What happens if you do not submit it?

The Decision is blunt. If the AUP report is not submitted, the conditions for the qualifying distribution activity are treated as not met. The distribution income then loses its qualifying status.

That has knock-on effects. Non-qualifying revenue counts against the de minimis limit, which is the lower of AED 5 million or 5% of total revenue. Breach it and the QFZP regime can fall away for the whole entity. Under the Corporate Tax Law, a person that stops meeting the QFZP conditions loses that status for the period and the following four tax periods. For a distributor with thin margins, a 9% charge on the full taxable income can change the business case for the free zone structure.

A practical compliance plan for 2026 and 2027

Map your distribution flows now

List every product line, the zone it enters through, and every customer type. Separate sales to resellers from sales to end users. This tells you which revenue you can defend as qualifying and which you cannot.

Fix customer onboarding

Add a reseller declaration and a licence copy to your customer onboarding pack. Diarise licence expiry dates. A declaration collected in October 2027, after the auditor asks, is weaker evidence than one signed at onboarding.

Keep import evidence with the sales file

Link each sale to the import documents for the goods sold. Most ERP systems can attach customs declarations and bills of lading to the receiving document. If yours cannot, a simple shared register by shipment number works.

Appoint the auditor early

Agree the engagement with your auditor before year-end. A pre-year-end dry run on a small sample will show gaps while you can still fix them. Remember the AUP report sits alongside, not instead of, the audited financial statements a QFZP already needs.

Align transfer pricing

Many Designated Zone distributors buy from related parties. Their prices must be at arm's length and documented. The AUP report does not cover pricing, but the FTA will read both together.

How GULF CONSULT helps

Our corporate tax team reviews whether your activity is a qualifying distribution activity, tests your de minimis position and builds the document trail. Our audit team can perform or prepare you for the AUP engagement under ISRS 4400. If you are still checking the wider QFZP conditions, start with our guide to Qualifying Free Zone Person status.

Talk to GULF CONSULT

Not sure whether your free zone distribution business is caught, or whether your files would pass? Book a free 30-minute consultation with GULF CONSULT. Email [email protected], call +971 58 600 4833 or message us on WhatsApp.