Qualifying Commodities Traders (QCT) can apply 0% tax rate based on the legal structure, nature of business, annual business revenue and if they are meeting the other conditions stated by the UAE corporate tax law.
Qualifying Commodities comprise of metals, minerals, energy, and agricultural commodities in their raw form on a Recognized Commodities Exchange Market. The term recognized commodities exchange market refers to; Markets that are established in the UAE and regulated by the regulatory authorities (regulatory institutions as Central Bank of the UAE, the Dubai Financial Services Authority of the Dubai International Financial Centre (DFSA), the Financial Services Regulatory Authority of the Abu Dhabi Global Market (FSRA), or the Securities and Commodities Authority (SCA). For instance, the Dubai Gold & Commodities Exchange in the UAE) or Markets are of equal standing if established outside the state (for example, the Chicago Board of Trade, and the London Metal Exchange).
Qualifying Commodities Traders can be classified into juridical persons and natural persons based on the legal status. The QCT that are juridical person and incorporated in free zones can be recognized as Qualifying Free Zone Persons (QFZPs). Free zone-based juridical persons who are not meeting the conditions placed by the CT lax will be classified as Non-Qualifying Free Zone Persons (non-QFZPs).
The Qualifying Commodity must be in a form that is traded on a Recognized Commodities Exchange Market. Metals, minerals, energy, and agriculture commodities that are suitable for trading on a Recognized Commodities Exchange Market will be particularly in raw form when they meet the conditions to be traded on the specified exchange (for example, gold being purity level of 99.4% bullion form). The actual trading activity itself does not need to be performed through an exchange.
Raw form refers to commodities in their natural, unprocessed state, without adding any value, or with minimal processing (for example, separation of sand, water and other impurities from crude oil) to meet the trading standard on a recognized stock exchange. For instance, under agricultural commodities it includes products such as wheat, corn, and soybeans. In Energy commodities it includes crude oil and natural gas. Under Metals it includes items such as gold, silver bars, and aluminum ingots.
Although many commodities are traded in their raw form, it is essential to recognize that some degree of processing may need to meet the required trading standards or conditions necessary for trading on a Recognized Commodities Exchange Market.
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