Distributing goods in or from a Designated Zone is one of the activities that can earn a Qualifying Free Zone Person (QFZP) 0% Corporate Tax. But the conditions are strict: the goods must be sold to customers who resell them, and the goods must pass through the Designated Zone.
FTA Decision No. 6 of 2026 now sets out how you prove it. For tax periods starting on or after 1 January 2026, a QFZP relying on the distribution activity needs an agreed-upon procedures (AUP) report from an independent auditor, on top of its audited financial statements.
Who this applies to
Any Qualifying Free Zone Person that earns qualifying income from distribution of goods or materials in or from a Designated Zone to customers that resell them, or process them for resale. The decision adds to the conditions already set by Ministerial Decision No. 84 of 2025.
If you do not rely on the distribution activity, for example because your income comes only from other qualifying activities, this report is not needed.
What the auditor checks
The AUP report is prepared under the international standard ISRS 4400 by an independent auditor licensed in the UAE. It checks two things on a sample of your transactions:
- The customer is a reseller. The goods are sold to customers who resell them, or parts of them, or process them for resale.
- The goods went through the Designated Zone. The goods entered the State through, or were stored in, the Designated Zone.
The evidence you need to keep
For each sampled transaction, the auditor will want to see documents such as:
- The customer's trade licence, showing a trading or resale activity
- A customer declaration confirming the goods are for resale
- Sales agreements, purchase orders and invoices
- Import and customs documents, and bills of lading or other transport documents showing the goods passed through the Designated Zone
If you cannot produce them, the auditor cannot confirm the condition, and the income is at risk.
How the sample is chosen
The decision sets a minimum sample size using the formula N / (1 + N × 0.01), where N is the number of distribution transactions, which gives a 10% margin of error. The sample must also include your highest-value transactions. For 1,000 transactions, that is about 91 transactions to test.
The deadline
The AUP report must be completed within 30 days after the deadline for filing the Corporate Tax return for the period. If you do not have it, the distribution conditions are treated as not met, which can mean the income is taxed at 9%, or even the loss of QFZP status.
What to do now
- Confirm whether you rely on the distribution activity for qualifying income.
- Collect customer declarations and trade licences for your existing customers, and make them part of onboarding new ones.
- Link customs and transport documents to each sale in your records.
- Engage your auditor early so the AUP work is planned alongside the financial statement audit.
How Dreambooks helps
Dreambooks lets you attach trade licences, customer declarations, customs documents and bills of lading to each customer and sale, so the evidence for every sampled transaction is a click away when the auditor asks.
Official sources
- FTA Decision No. 6 of 2026 on additional procedures for Qualifying Free Zone Persons
- FTA: Corporate Tax legislation
This article is general information as of August 2026, not tax advice. Check FTA Decision No. 6 of 2026 and the latest FTA guidance, or speak to your tax adviser, before acting.