Substance with outsourced staff
Can my free zone company outsource its work and still meet substance?
The situation
Outsourcing core activities is allowed only to providers in the same free zone, with adequate supervision by the company.
The law
- Art 18, Federal Decree-Law 47 of 2022: Adequate substance in a free zone
What it means for you
Outsourcing to a group company in India or to a mainland contractor does not count for zone substance. Example: a zone software company whose coding is all done by an Indian affiliate, with no UAE staff, is unlikely to meet the test. Keep contracts, invoices and evidence of supervision.
What to do
- List who performs each core activity.
- Check the provider is in the same free zone.
- Show your supervision of the provider.
- Hire locally where gaps exist.
We can do this for youQualifying Free Zone Person review and return: substance, qualifying income, de minimis test and audited accounts: AED 6,000