The UAE Ministry of Finance continues to strengthen the clarity and integrity of its Corporate Tax regime with the release of Ministerial Decisions No. 229 and 230 of 2025, both effective from 1 June 2023. These decisions are instrumental in guiding Free Zone businesses on what qualifies for the 0% Corporate Tax rate and what activities fall outside its scope.
Together, they refine the implementation of Federal Decree-Law No. 47 of 2022 and bring precision to key areas such as Qualifying Activities, Excluded Activities, and Recognised Price Reporting Agencies.
Ministerial Decision No. 229 of 2025: Defining Qualifying and Excluded Activities
What the Decision Covers
Ministerial Decision 229 provides comprehensive guidance for Qualifying Free Zone Persons (QFZPs). These are entities established in UAE Free Zones that meet specific criteria, allowing them to benefit from a reduced tax rate on their Qualifying Income.
The Decision clarifies two main aspects:
- What counts as Qualifying Activities (eligible for 0% tax), and
- What counts as Excluded Activities (ineligible for tax exemption).
Qualifying Activities Explained
When these activities are undertaken by a Qualifying Free Zone Person (QFZP), the income derived from them may be eligible for the 0% corporate tax rate, subject to meeting all other prescribed conditions.
The Decision specifies the following as Qualifying Activities:
- Manufacturing of Goods or Materials – covering the production, improvement, or assembly of products or materials from raw material or components.
- Processing of Goods or Materials – involving the preparation, treatment, transformation, or conversion of goods into another form suitable for commercial or industrial use or sale.
- Trading of Qualifying Commodities – referring to the physical trading of commodities that have a quoted price in a recognised market. This also includes related derivatives for risk hedging and structured commodity financing like factoring or prepayment arrangements.
- Holding of Shares and Other Securities for Investment Purposes – including the long-term holding of equity interests, financial instruments, or other securities that entitle the holder to receive profits or liquidation proceeds. Applies when securities are held for at least 12 months for investment purposes.
- Ownership, Management and Operation of Ships – encompassing the ownership, management, and operation of ships used in international transportation, towing, dredging, or assistance at sea, but excluding ships used for local transport or leisure.
- Reinsurance Services – covering the conduct of reinsurance operations regulated under the applicable insurance legislation.
- Fund Management Services – involving the management of investment funds, including portfolio and risk management, under the supervision of a competent regulatory authority.
- Wealth and Investment Management Services – including discretionary and non-discretionary investment management and advisory services that are subject to regulatory oversight within the State.
- Headquarter Services to Related Parties – consisting of administering, overseeing, and managing the business activities of related parties, including functions such as business planning, procurement, risk management, and coordination of group activities.
- Treasury and Financing Services to Related Parties or for Own Account – including cash and liquidity management, financing, debt management, financial risk management and related advisory services.
- Financing and Leasing of Aircrafts – covering the financing, leasing, or securitisation of aircraft, aircraft engines, or components, along with related advisory and agency services.
- Distribution of Goods or Materials in or from a Designated Zone – involving the buying and selling of goods or materials, it may include import, storage, handling, and export of goods or materials in or from a Designated Zone, provided the transactions meet certain conditions.
- Logistics Services – including the storage, transportation, and handling of goods or materials on behalf of others, without taking title to them.
- Ancillary Activities – referring to activities that are necessary for the performance of the above qualifying activities, or that make only a minor contribution to them and are closely related in nature.
Activities That Are Excluded
The Decision also draws a clear line around activities which shall be considered Excluded Activities. These include:
- Transactions primarily with natural person (except for certain qualifying activities)
- Banking activities
- Insurance activities (except for certain qualifying activities)
- Financing and Leasing activities (except for certain qualifying activities)
- Ownership or exploitation of immovable property (except commercial property in a Free Zone transacted with another Free Zone Person); and
- Any activity ancillary to these excluded ones.
The De Minimis Rule: A Small Margin for Non-Qualifying Income
To maintain flexibility, the Ministry introduced a de minimis threshold. A QFZP may still qualify for the 0% tax rate as long as its non-qualifying revenue in a Tax Period does not exceed the lower of:
- 5% of total revenue, or
- AED 5 million.
Qualifying Intellectual Property Income
The Decision further addresses income derived from Qualifying Intellectual Property (IP). To benefit from the 0% corporate tax rate, income from IP must be derived from genuine research and development (R&D) activities carried out by the Qualifying Free Zone Person itself or outsourced to independent parties.
The Decision adopts an approach, which proportionally links the tax benefit to the level of qualifying R&D expenditure. In simple terms, only the proportion of IP income that corresponds to genuine R&D activity qualifies for the benefit.
To substantiate such claims, businesses must maintain proper documentation of:
- IP ownership and exploitation rights,
- Expenditures incurred in development
- Overall Income derived from the QIP, and
- The link between R&D spending and IP income.
Other Conditions
Additionally, a QFZP must:
- Ensure that its non-qualifying revenue does not exceed the de minimis threshold; and
- Prepare audited financial statements in line with Ministerial Decision No. 84 of 2025.
Failure to meet these conditions at any time during a tax period will result in the entity losing its qualifying status from the start of that period, and for the next four tax periods.
It repeals Ministerial Decision No. 265 of 2023, which previously governed the list of Qualifying and Excluded Activities.
Ministerial Decision No. 230 of 2025 — Recognised Price Reporting Agencies
Ministerial Decision No. 230 of 2025 complements Decision 229 by identifying Recognised Price Reporting Agencies (PRAs) used to determine Quoted Prices for trading Qualifying Commodities.
Recognised Price Reporting Agencies
The following agencies are officially recognised:
- S&P Global Commodity Insights (Platts & Fertecon)
- Argus Media
- ICIS (Independent Commodity Intelligence Services)
- OPIS (Oil Price Information Service)
- RIM Intelligence
- CRU Group
- Quantum Commodity Intelligence
- Fastmarkets
- General Index
- ICE (Intercontinental Exchange)
- MONTEL
- Spark Commodities
- Expana
Conclusion
Ministerial Decisions No. 229 and 230 of 2025 bring greater clarity to the UAE’s Corporate Tax regime. They clearly define which Free Zone activities qualify for the 0% tax rate and establish recognised benchmarks for commodity pricing. Together, they reinforce the UAE’s commitment to a transparent, substance-driven, and globally aligned tax framework, ensuring that Free Zone incentives continue to support genuine business activity and innovation.
