Consequence of failing a QFZP condition
If my company fails the free zone conditions once, how long is the impact?
The situation
A company that fails any condition stops being a Qualifying Free Zone Person from the start of that tax period and for the next four periods.
The law
- Art 18, Federal Decree-Law 47 of 2022: Loss of status for the period and four subsequent periods
What it means for you
So one bad year can mean five years on the standard regime. Example: failure in 2026 means standard tax for 2026 to 2030. This is why a cautious approach matters: if you are unsure, structure income so the test is clearly met, or choose the standard rate knowingly.
What to do
- Assess every condition before year end.
- Fix gaps such as audit or substance in time.
- If failure is likely, plan for the standard regime.
- Document decisions in a tax file.
We can do this for youQualifying Free Zone Person review and return: substance, qualifying income, de minimis test and audited accounts: AED 6,000