Free Zone Corporate Tax Registration

Tax exemption, simplified rules and regulations, and investment in world-class infrastructure are incentives for operating within Free Zones. However, with the recently introduced corporate tax provisions in the UAE, companies operating from Free Zones have been exposed to complex tax compliance requirements.

Here, we will discuss the eligibility criteria, process of registration in Free Zone corporate tax, and key considerations along with compliance requirements. Whether you are an entrepreneur, business owner, or financial professional, staying updated about the intricacies of Free Zone corporate tax registration is highly important in terms of retaining your competitiveness and ensuring that your business remains valid in the long run.

Benefits of Free Zone Corporate Tax Registration

Free zone corporate tax registration offers many advantages to the businesses operating in the free zones. Some of the most notable advantages include:

• 0% Corporate Tax Rate: QFZPs enjoy a 0% corporate tax rate on qualifying income, which results in significant reductions of tax liabilities compared to mainland businesses, which merely have a standard 9% tax on taxable income of more than AED 375,000.
• Profit repatriation: Free zone companies may freely and unrestrictedly take back their profits and capital from the UAE, hence adding greater flexibility to financial dealings.
• Duty Exemptions: Many free zones offer waivers on import and export duties, further lowering operational costs for businesses.

Eligibility Criteria for Free Zone Corporate Tax Registration

To qualify to start a business in any UAE Free Zone, there are defined qualification requirements. The following are the key considerations regarding the types of businesses that can be registered, the requirements of registration, and the documents required.

Nature of Businesses Qualifying to be Registered at Free Zones

• General Trading Companies: The companies, which mainly trade with various goods imported and exported.
• Service Providers: Consultancy-based businesses, IT, and legal service firms.
• Manufacturers: companies involved in the manufacturing and assembly of products.
• E-commerce Ventures: E-commerce companies that operate under the free zone regulations.
• Technology Firms: companies involved in the development and innovation of technology.
• Media and Creative Industries: Media production business, advertising, and creation of content. There is a different specification of each Free Zone along certain industries; therefore you are expected to look out for one whose business activities you are involved in.
  

Documents Required

To successfully register a business in a Free Zone, the following documents are usually required:

• Application Form: Complete application form by the Free Zone authority
• Copies of Passports: Of Shareholders and managers or directors to be engaged in the business.
• Memorandum of Association (MOA): This is the constitution of the company that defines its structure and the aims of the company.
• Articles of Association (AOA): Articles of association define the internal rules and regulations of the conducting of the company's business.
• Trade Name: A unique trade name should be selected that must be in Free Zone acceptable naming conventions and it has to be registered.
• Documentation: Proof of Address, Utility bills or lease agreements for proposed business premises in the Free Zone
• Bank Reference Letter: a letter confirmed from a bank regarding account standing, in relation to matters of financial credibility.
• Non-Objection Certificate (NOC): This, if applicable, would need to be issued by any existing sponsor, only if the applicant is already a resident in the UAE.

Step-by-Step Registration Process

Registration to establish a company in any of the UAE Free Zones is an extremely formalized process. Below are the steps involved in the process from pre-registration procedures to post-registration activities.

• Log in to the EmaraTax Portal: Use your login credentials, which may include UAE Pass, to log in to the EmaraTax portal. If you have not yet created an account, create it, or reset your password if you have forgotten it.
• Add Taxable Person: Confirm that a taxable person is associated with your account. If not, create a new taxable person by filling in the necessary information.
• Open Corporate Tax Dashboard: Select a taxable person and the Corporate Tax Dashboard will open.
• Start Enrollment: Click "Register" at the tile of Corporate Tax and read the instructions to check the box for continuing,
• Fill Entity Section: Fill in all the details of the Entity based on the type of business and click "Next"
• Fill Identification Section: Provide the trade license along with the business activity, and click "Next".
• Complete Contact-Details: Fill in the registered business address and continue by clicking "Next".
• Authorized Signatory Section: Attach the authorized signatories and any other necessary attachments, say power of attorney if needed.
• Verify and Declare: Verify all the information click on the declaration checkbox and submit it.
• Corporate Tax Registration Number: All the references will be generated automatically upon submission. FTA will communicate with respect to approval, rejection, or requiring more information.

Penalty for Non-Compliance

As per Cabinet Decision No. 10 of 2024, from 1st of March, 2024 the Ministry of Finance, in case of failure to comply with Corporate Tax Registration levies a penalty of AED 10,000.

Free Zone-Specific Regulations and Requirements

The UAE has a number of Free Zones, with each one serving to attract specific businesses through certain offers and forms of infrastructure. Below is a concise summary of some of the major Free Zones and the features that distinguish them:

• Dubai Free Zone: Dubai Free Zone has strategic and up-to-date infrastructure. The focused industries in the Dubai Free Zone are trade, logistics, and technologies. International markets are reached for companies with advanced facilities.
• Jebel Ali Free Zone Authority (JAFZA): JAFZA is one of the largest and most established free zones in the UAE. JAFZA mainly focuses on trade and logistics, providing the full facilities of warehousing, manufacturing, and distribution to companies in global trade and supply chain operations.
  
  

Conclusion

Relatively favorable business policies in the UAE’s Free Zones offer several advantages, including strategic locations, modern infrastructure, and tax benefits. Free Zones like Dubai Free Zone and JAFZA are particularly attractive to trade, logistics, and technology-based businesses. However, it’s important to note that local laws still apply, and staying compliant requires professional guidance.

To fully benefit from Free Zone incentives, businesses need expert advice to keep up with changing regulations. Reyson Badger, with its deep understanding of Free Zone regulations and corporate tax laws, can help businesses navigate VAT, customs duties, and other legal requirements. This ensures compliance while improving operational efficiency.

If your business is considering registering for Free Zone corporate taxation, now is the perfect time. Contact Reyson Badger for professional consultation and expert assistance in navigating the regulatory environment and maximizing your Free Zone benefits.