UAE FTA Decision No. 6 of 2026 : New Agreed-Upon Procedures (AUP) Report Requirement for Qualifying Free Zone Persons Engaged in Distribution Activities
The UAE Federal Tax Authority (FTA) has issued Decision No. 6 of 2026, introducing an important new compliance requirement for Qualifying Free Zone Persons (QFZPs) carrying out qualifying distribution activities.
Effective for Tax Periods beginning on or after 1 January 2026, affected businesses seeking to benefit from the 0% Corporate Tax rate on Qualifying Income must obtain an Independent Agreed-Upon Procedures (AUP) Report prepared in accordance with International Standard on Related Services (ISRS) 4400 – Agreed-Upon Procedures Engagements.
The Decision strengthens the Corporate Tax compliance framework by requiring independent verification that the conditions for qualifying distribution activities continue to be satisfied.
Who is Affected?
The new compliance requirement applies to Qualifying Free Zone Persons that derive Qualifying Income from distribution activities and wish to continue benefiting from the 0% Corporate Tax rate.
Businesses operating distribution models through UAE Free Zones should assess whether their activities fall within the scope of the Decision and ensure timely completion of the required AUP engagement.
Independent Agreed-Upon Procedures (AUP) Report
Under FTA Decision No. 6 of 2026, affected businesses must obtain an Independent Agreed-Upon Procedures (AUP) Report performed by an independent UAE-licensed auditor in accordance with ISRS 4400.
The procedures are required to apply a 10% margin of error sampling methodology as prescribed by the Decision.
Unlike an audit, an AUP engagement does not provide an audit opinion or assurance conclusion. Instead, the independent practitioner performs agreed procedures and reports factual findings, enabling the FTA to verify compliance with the prescribed conditions.
Importantly, a single AUP engagement may be used to satisfy both verification requirements, reducing duplication where both conditions apply.
What Will the AUP Engagement Verify?
The AUP engagement focuses on verifying two fundamental qualifying conditions for distribution activities.
1. Verification of Customer Reseller Status
The independent practitioner will perform agreed procedures over documentation supporting the customer's status as a reseller, including:
- Trade or commercial licence.
- Signed reseller declaration.
- Sales agreements.
- Sales invoices.
- Supporting commercial records.
2. Verification of Designated Zone Importation
The engagement will also verify that goods have entered the UAE through a Designated Zone, supported by documentation such as:
- Customs and import documentation.
- Shipping documents evidencing entry through a Designated Zone.
- Warehouse records.
- Inventory records.
Submission Deadline
The completed AUP Report must be submitted to the FTA within 30 days after the due date for filing the Corporate Tax Return for the relevant Tax Period.
Businesses should therefore plan the engagement well in advance to allow sufficient time for the agreed procedures to be completed and the report to be finalised before the submission deadline.
Consequences of Non-Compliance
Failure to submit the required AUP Report within the prescribed timeline may have significant Corporate Tax consequences.
Where the report is not submitted as required, the business may lose its Qualifying Free Zone Person (QFZP) status in respect of the relevant qualifying distribution income. As a result, that income may become subject to the standard UAE Corporate Tax rate of 9%, subject to the provisions of the Corporate Tax Law.
Given the potential financial impact, businesses should ensure that appropriate governance procedures and documentation are maintained throughout the Tax Period.
Conclusion
FTA Decision No. 6 of 2026 introduces a significant new compliance obligation for Qualifying Free Zone Persons engaged in distribution activities. While the substantive eligibility conditions for the 0% Corporate Tax regime remain unchanged, businesses must now obtain independent factual verification through an Agreed-Upon Procedures engagement and submit the resulting report within the prescribed timeframe.
Affected businesses should begin preparing early by reviewing their documentation, strengthening internal controls and engaging an independent UAE-licensed auditor to ensure compliance with the new requirements.
Disclaimer
This document is provided for general informational purposes only and does not constitute tax or legal advice. While every effort has been made to ensure accuracy, tax legislation and interpretations may change. Businesses should seek professional advice tailored to their specific circumstances to ensure compliance with applicable UAE tax regulations.
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