Key compliance changes for qualifying Free Zone Businesses in the UAE have introduced new compliance requirements for eligible businesses operating in UAE Free Zones. The FTA of the UAE has issued FTA Decision No.6 of 2022 to enhance Corporate Tax compliance for those businesses that fall under the category of Qualifying Free Zone Persons (QFZPs). Companies engaged in the sale of merchandise or supplies from or within a designated zone need to be aware of the new provisions and be prepared to meet the new compliance requirements.
The renewed Decision is relevant to the tax periods which begin on or after January 1, 2026. Approved firms should assess their actions, increase their control over documentation and employ an external auditor where it is needed. Proper preparation enables us to minimize compliance risks and escape undue sanctions. Knowing all the new requirements makes it easier for companies to operate successfully in the framework of the UAE Corporate Tax Law requirements.
What Are the Key Compliance Changes for Qualifying Free Zone Businesses in the UAE?
FTA Decision No.6 of 2026 defines extra compliance rules for specific Qualifying Free Zone Persons (QFZPs). The Decision is only meant to apply to the eligible businesses that perform the distribution of goods or materials in or outside of a Designated Zone as a Qualifying Activity. It is necessary for every eligible business to implement and comply with the newly introduced regulations along with the UAE Corporate Tax Law and the relevant Cabinet decisions, ministerial decisions, as well as the FTA guidance. The following is the list of the major compliance changes introduced under the FTA Decision No. 6 of 2026.
- Obtain the Agreed Upon Procedures (AUP) report if the business is included in the scope of the Decision.
- Appoint an independent and appropriately qualified external auditor to perform the AUP engagement under ISRS 4400 (Revised).
- Check that the customers conform to the criteria by using the necessary supporting documents.
- Confirm that the imported goods entered the UAE through the Designated Zone where required.
- Keep the records and the supporting documents for the period of time that is defined by the UAE Corporate Tax legislation.
- Provide the AUP report within the deadline defined by the FTA.
- Follow the additional compliance requirements for Tax Periods beginning on or after 1 January 2026.
What Is an Agreed-Upon Procedures (AUP) Report?
An Agreed-Upon Procedures (AUP) report is a report of factual findings prepared by an independent external auditor. The auditor performs certain procedures that is agreed with the company and presents the findings without an audit opinion. AUP Report is to be obtained by eligible QFZPs in order to confirm their compliance with the requirements of FTA Decision No. 6 of 2026, which prescribes in particular the necessary characteristics for qualifying distribution activities. The engagement process must be conducted in compliance with International Standard on Related Services (ISRS 4400 Revised) to provide some evidence of the company’s compliance with the conditions prescribed and of proper recordkeeping.
What Does the AUP Report Verify?
The report serves as a means of verification of important conditions associated with the qualifying activity of the QFZP. The external auditor has to examine relevant documents and perform agreed procedures after which he gives his report on the findings. Here are some of the important areas which may require verification.
Customer Eligibility: Companies must possess proper documentation to prove that customers comply with the eligibility conditions.
Imported Goods: Whenever applicable, all documentation must prove that the imported goods have gone through the UAE through a Designated Zone.
Qualifying Transactions: All the transactions concerned must meet the identified conditions of the qualifying activity.
Supporting Documentation: The company must possess sufficient documents proving the information examined during the AUP.
Who Is Required to Obtain an AUP Report?
Only a select few firms operating within the UAE’s Free Zones need to deal with the extra requirement of having an AUP. The requirement is imposed specifically on Qualifying Free Zone Persons who comply with the requirements and get involved in the distribution of goods or products in or from the Designated Zone in the course of the Qualifying Activity. Therefore, before heading for an AUP engagement, firms need to make sure that their operations and transactions fall under the AUP criteria. The most important conditions to be reviewed by companies are the following:
- A business should be classified as a Qualifying Free Zone Person (QFZP).
- A business must deal with the distribution of goods or products within the territory of a Designated Zone.
- The distribution activity must fall under the Qualifying Activity criteria.
- The company must possess supporting documents to prove that its activities are qualifying enough.
- Occasionally, companies must produce records confirming that imported products entered the UAE through a Designated Zone.
- Companies must back up customers eligibility with relevant documents.
When Do the New Requirements Apply?
FTA Decision No. 6 of 2026 becomes effective for Tax Periods that begin on or after January 1st, 2026. Therefore the businesses have to consider the years they operate in before determining to what Tax Period their new guidelines apply. For instance, if a QFZP has a financial year from January 1st, 2026, to December 31, 2026, it will be required to comply with the additional guidelines during this Tax Period. However, if a business observes a financial year running from July 1st, 2025, to June 30, 2026, it will have to treat the requirements only after the Tax Period starting from January 1st, 2026.
AUP Report Submission Deadline for QFZPs
Besides acquiring the AUP Report, eligible QFZPs should need to present it to the Federal Tax Authority by the specified date. As compliance with the deadline is a significant aspect of the extra compliance requirements implemented under the FTA Decision No. 6, dated 2026. Since the AUP procedures require planning, it is advisable for companies to begin the AUP engagement process sooner and ensure that there is enough time for completing the requested work to the external auditor. Typically, the AUP Report has to be presented to the FTA within 30 days past the date by which the Corporate Tax Return for the respective Tax Period is filed, unless advised otherwise by the FTA.
What Should Businesses Prepare?
It is possible to help with the reporting process by keeping certain records throughout the Tax Period in a systematic form. Moreover, keeping proper documentation in order will help the external auditor in finishing the given work successfully. The following key aspects should be noted:
- Supporting customer documents evidencing eligibility.
- Records of transactions qualifying for distribution.
- Documents confirming movement or import of goods through the Designated Zone.
- Accounting documentation and other document evidence.
- Evidence supporting compliance with the conditions of the Qualifying Activity.
- Records required under UAE Corporate Tax legislation and related regulations.
What Should QFZPs Do to Stay Compliant?
Qualifying Free Zones need to audit their compliance activities and analyze if FTA Decision no. 6 of 2026 applies to their businesses. Companies should pay attention to changes in UAE Corporate Tax regulations and constantly verify if they apply for QFZP terms. Proper preparation will simplify the AUP process and decrease the odds of missing significant rules. The main steps QFZPs should follow are as follow:
Check the scope of activities: Ascertain if they meet the additional criteria.
Review documentation: Verify if the documents in possession are sufficient to prove that they qualify.
Review qualifying activities: Check if the distribution activities comply with the requirements.
Engage an Auditor: Select a professional and independent auditor to assist with the requirements of AUP procedures.
Draft the AUP report: Allocate enough time to perform the procedures prior to deadlines.
Keep records: Safeguard the documents for a stipulated period of time as dictated by UAE Corporate Tax regulations.
Monitor compliance: Regularly examine business operations and legislative changes with regard to QFZP compliance and Corporate Tax benefits.
Why Ongoing Compliance Matters?
To retain your QFZP status, compliance must be a continuous process, not just something you do when your firm is audited. Your organization must constantly monitor its operations, transactions, accounts, documentation, and reviews in specific Accounting Periods. A consistent practice of monitoring for compliance helps organizations recognize problems before they escalate into bigger ones which would result in substantial taxation or reporting issues.
How Can Businesses Prepare for the AUP Engagement?
Early preparation can greatly assist QFZPs in completing the AUP procedure efficiently. Businesses need to gather all necessary documents before they contact external auditors and ensure that the records concerning their distribution of goods are backed up with good evidence. An internal audit may also be useful in identifying documents that may be missing before the auditor actually commences the work. The following are some simple procedures that businesses can follow:
- Check the records of customers and make sure that the necessary eligibility documentation is present.
- Check evidence of goods or materials being distributed.
- Review designated zone records in case of imported goods.
- Organize the supporting documents so that the auditor has easy access to them.
- Check qualifying conditions of operations and transactions that need to be evaluated.
- Discuss the engagement with the independent external auditor at an early stage.
- Set an internal deadline that would allow the business to make any required changes before submitting their documents to the FTA.
How We Can Help with QFZP Compliance?
Qualified Free Zone enterprises may seek assistance in determining their eligibility and qualification, as well as in verifying their documentation and complying with the requisite regulations. Our group of specialists is going to assist enterprises in understanding the requirements established by the Federal Tax Authority Decision No. 6 of 2026. Moreover, we will help recognize the documentation shortcomings and communicate with independent auditors.
QFZP Compliance Services We Offer
We provide a wide range of services related to QFZP compliance so that Free Zone companies can comply with Corporate Tax regulations. Our services include:
- QFZP qualification assessment
- Corporate tax compliance advising
- Designated Zone compliance inspections
- Assistance in documentation and keeping records
- Aid with АUP preparation
- Coordination with independent auditors
- Assessment of complying activities
- Compliance with corporate tax regulations
Conclusion
Key Compliance Changes for Qualifying Free Zone Businesses in the UAE require eligible QFZPs to take additional steps from Tax Periods beginning on or after 1 January 2026. Businesses that participate in qualifying distribution operations must check their records, ensure that the necessary conditions are met, and compile the AUP Report, when applicable. By paying attention to deadlines and continuous compliance with rules, companies will achieve FTA requirements and provide themselves with QFZP benefits.
