UAE Corporate Tax Updates: Ministry of Finance Issues Two New Ministerial Decisions on Qualifying and Excluded Activities in Free Zones
The UAE Ministry of Finance has issued two new Ministerial Decisions that impact the application of Corporate Tax laws to businesses operating in Free Zones. These decisions provide enhanced clarity and updated definitions related to activities eligible for the Free Zone Corporate Tax regime.
Key Highlights
- Ministerial Decision No. 229 of 2025 replaces Ministerial Decision No. 265 of 2023, which has now been repealed. It expands the scope of "Qualifying Commodity Trading" by removing the requirement for commodities to be traded “in raw form”. The decision now allows the trading of metals, minerals, industrial chemicals, energy and agricultural commodities, and associated by-products—provided that a Quoted Price exists.
A Quoted Price refers to the price of a qualifying or related commodity as specified by a Recognised Commodity Exchange Market or a Recognised Price Reporting Agency, as defined by a decision issued by the Minister.
- Ministerial Decision No. 230 of 2025 sets out the list of Recognised Price Reporting Agencies that businesses can rely on when determining the market price for qualifying commodities. This aligns the UAE’s tax practices with international standards and enhances transparency and certainty.
Additional clarifications include:
- Self-investment activities now qualify under Treasury and Financing Services when carried out for the taxpayer’s own account or for Related Parties.
- The distribution of goods or materials in or from a Designated Zone may include transactions with Public Benefit Entities—without impacting the application of the De Minimis Threshold.
These updates are designed to improve legal certainty for Free Zone entities, encourage compliance, and support the UAE’s broader strategy of attracting foreign investment and promoting economic diversification.
Implications for Businesses
With these updates, eligible Free Zone entities can now conduct a broader range of activities while still benefiting from the 0% Corporate Tax rate, provided they meet the relevant conditions.
Businesses are encouraged to review their operations to ensure alignment with the revised definitions and thresholds and assess how these changes may affect their Corporate Tax status.
Disclaimer
This update is provided for information purposes only and does not constitute legal or tax advice. Businesses potentially affected by these changes should seek advice from qualified professionals or consult the Federal Tax Authority (FTA) for official guidance.
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