Free zone company selling goods to the mainland
We import goods into our free zone warehouse and sell to mainland retailers. Is that qualifying?
The situation
Sales of goods to mainland persons are generally non-qualifying, except in specific cases such as certain goods imported through a designated zone for the customer's own use as allowed by the rules.
The law
- Cabinet Decision 100 of 2023: Transactions with non-free zone persons are non-qualifying unless an exception applies
What it means for you
Distribution to mainland resellers is a common reason for failing the de minimis test. Example: AED 3 million of sales to mainland shops out of AED 10 million revenue fails. Some groups route mainland sales through a mainland company and keep export trade in the zone.
What to do
- Split sales by customer type.
- Test the de minimis limit.
- Consider a mainland distributor entity.
- Price intra-group sales at arm's length.
We can do this for youQualifying Free Zone Person review and return: substance, qualifying income, de minimis test and audited accounts: AED 6,000