All the following conditions to be satisfied
• Maintaining adequate substance in the FZ
Substance Test
1. Engage in its primary income-generating operations within a Free Zone.
2. Maintain sufficient assets.
3. Employ a sufficient number of qualified personnel.
4. Allocate an appropriate level of operating expenses.
5. Outsourcing to a Free Zone entity is permitted, provided there is oversight and management of the outsourced entity. Derives Qualifying income
Derives Qualifying income
1. Income from FZs (All income except excluded activities)
2. Income from non-FZs( mainland./ outside UAE (Only Qualifying income)
3. Any Person (Income from qualifying intellectual property calculated in accordance with MD 265 of 2023)
4. Natural Person (Only four prescribed activities)
Ownership, management and operation of Ships;
o Prescribed Fund management services;
o Prescribed Wealth & investment management services; and
o Financing and leasing of aircraft including engines and rotable components
• Has not elected to be subject to CT
• Adheres to Transfer Pricing Regulations
• Satisfy any additional required conditions
• Prepares and keeps Audited Financial Statements
The De-Minimis Test states that if the total revenue is either 5% of the total revenue or AED 5 million, whichever is less, certain conditions apply:
1. Activities involving Free Zone Persons (FZPs) are excluded.
2. Any activities that do not qualify with Non-Free Zone Persons (NFZPs) are also excluded.
3. Activities that fall outside of the four specified categories for Natural Persons are excluded as well.
All of these are classified as Non-Qualifying income.
To pass the De-Minimis Test, the total of these exclusions must meet the criteria. If it does not, the total income of the FZP will be subject to a 9% tax.
Exclusions from Qualifying Income (Also applicable to Non-Qualifying Income)
1. Income linked to a Domestic Permanent Establishment (PE) or a Foreign PE of the Qualified Free Zone Person (QFZP).
2. Income derived from the ownership or use of real estate situated in the free zone, which comes from transactions with Non-Free Zone Persons (Non-FZP) concerning Commercial Property, as well as with any individual regarding non-Commercial Property.
3. Earnings from the ownership or use of intellectual property, excluding those earnings that are classified as qualifying income under MD 265 of 2023.
YOUNG AND RIGHT 
