From tax periods starting 1 January 2026, a Qualifying Free Zone Person (QFZP) that distributes goods or materials in or from a Designated Zone must obtain an independent auditor's agreed-upon procedures (AUP) report to keep the 0% Corporate Tax on that activity — and file it with the FTA within 30 days of the Corporate Tax return deadline. This is general information, not tax advice — confirm your position with PRF before acting.
What changed
Under FTA Decision No. 6 of 2026 (issued 2 June 2026, effective for tax periods on or after 1 January 2026), free-zone distributors face a new compliance step. If your qualifying income relies on the activity of distributing goods or materials in or from a Designated Zone, you must now back it with an agreed-upon procedures report from an independent external auditor. Without it, the FTA will treat the distribution conditions as not met — putting the 0% rate on that income at risk.
A quick primer: QFZP and Designated-Zone distribution
A Qualifying Free Zone Person can access a 0% Corporate Tax rate on its qualifying income, provided it meets strict conditions. "Distribution of goods or materials in or from a Designated Zone" is one of the listed qualifying activities. Decision 6 doesn't change whether the activity qualifies — it adds the evidence you must produce to prove it did.
What the report must prove
The AUP report — prepared under the international standard ISRS 4400 by your financial-statement auditor or another licensed independent auditor — must document factual findings on two points:
The documentation you must keep
Your auditor tests a sample, but you have to hold the underlying evidence. Keep, at minimum:
How the sampling works
The auditor doesn't check every transaction. Sample size is set by a formula — Sample Size = Population ÷ (1 + Population × 0.1²), using a 10% margin of error — and the sample is drawn from your highest-value customers, sales agreements and imports for the period. Each procedure and its factual finding is documented in the report, with the sample details in an appendix.
Need help with this? PRF’s FTA-registered advisors give a free 30-minute consultation.
Miss the deadline, lose the rate
If the report isn't submitted on time, the FTA treats the qualifying conditions for that distribution activity as not satisfied. In practice, that income can fall outside the 0% rate — a costly outcome that a routine, well-evidenced report avoids.
A free-zone electronics distributor imports stock through JAFZA (a Designated Zone) and sells in bulk to UAE retailers who resell. For its 2026 tax period, it must gather retailer trade licences and reseller declarations, keep its customs and bill-of-lading records, and have its auditor issue an ISRS 4400 report — filed within 30 days of its CT return deadline — to protect the 0% rate on that income.
What to do now
Confirm whether your qualifying income relies on Designated-Zone distribution; brief your auditor early on the ISRS 4400 engagement; and start collecting reseller and import evidence now, not at year-end. The first reports fall due 30 days after the 2026 CT return deadline, so the clock is already running.
Frequently asked questions
How PRF can help
PRF is an FTA-approved Dubai firm handling UAE Corporate Tax, VAT, accounting and audit. As a Registered Tax Agent and MoE Authorized Auditor, we can scope the ISRS 4400 engagement, set up your reseller and Designated-Zone evidence, and file the report on time — so your free-zone 0% rate stays protected. Book a free 30-minute call and we'll tell you exactly where you stand.