# What is QFZP (Qualifying Free Zone Person)?

Country: United Arab Emirates

A Qualifying Free Zone Person is a Free Zone entity that meets specific tests under the UAE Corporate Tax law to retain the 0% rate on Qualifying Income. Tests include: substance (people and assets in the Free Zone), audited financial statements, transfer pricing compliance, de minimis non-qualifying revenue (≤5% or AED 5m).

## Current rate (Annual; tested each financial year)

0% on Qualifying Income (vs. 9% for non-qualifying)

## Example

A Dubai Multi Commodities Centre (DMCC) trading FZCO sells to other Free Zone companies and non-UAE customers in qualifying activities. It maintains audited accounts and adequate substance: qualifies for QFZP, taxed at 0% on the qualifying portion.

## How QFZP (Qualifying Free Zone Person) works in United Arab Emirates

Qualifying Income includes:
- Income from transactions with other Free Zone Persons (excluding excluded activities)
- Income from qualifying activities with non-UAE customers (manufacturing, trading commodities, holding shares, etc.)
- Specific qualifying intellectual property income

Excluded activities and income from mainland UAE customers (other than those treated as 'Domestic Permanent Establishments' or specific allowed activities) attract the 9% rate. Failing the de minimis test (non-qualifying income > 5% of total or AED 5m, whichever is lower) disqualifies the entity from QFZP for 5 years.

Source: https://tax.gov.ae/en/taxes/corporate.tax/free.zone.persons.aspx

## Related terms

- [UAE Corporate Tax](https://accounts-os.com/ae/glossary/uae-corporate-tax)
- [Free Zone (UAE)](https://accounts-os.com/ae/glossary/free-zone-uae)
- [FZCO (Free Zone Company)](https://accounts-os.com/ae/glossary/fzco)