Qualifying income at 0%, non-qualifying at 9%.
Corporate tax due
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Tax on non-qualifying
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Blended rate
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How the qualifying-income split works
Free zones were the UAE’s headline pitch to foreign business for decades, and corporate tax did not erase that advantage so much as redraw it. A company that holds Qualifying Free Zone Person status pays one rate on the income that counts as qualifying and a different rate on everything else. This calculator splits your income into those two buckets, applies each rate, and shows the blended result so you can see what the regime actually costs you. It is aimed at founders and finance leads running entities in zones such as DMCC, JAFZA, DIFC, or ADGM who need a quick read on their effective tax before the detailed return.
Qualifying income is broadly income from transactions with other free-zone businesses and certain qualifying activities. Non-qualifying income is the rest, typically mainland-facing trade that does not meet the qualifying activity rules. The structure is stable and safe to plan around even if individual rate figures move, so the real work is correctly classifying your revenue, not memorising a percentage.
The 0 percent rate is conditional, not automatic
This is the trap that catches new free-zone companies. As this calculator models it, qualifying income is taxed at 0 percent and non-qualifying income at 9 percent, and crucially there is no AED 375,000 zero-rate band on the non-qualifying slice. That band exists for ordinary mainland companies, but a Qualifying Free Zone Person does not get to shelter its first AED 375,000 of non-qualifying income inside the zone regime. Treat those rates and that carve-out as the calculator’s assumptions and confirm the current figures with the FTA and your free-zone authority, because the qualifying-income framework has been refined more than once since corporate tax began.
Splitting AED 1 million of income
Suppose your company books AED 800,000 of qualifying income and AED 200,000 of non-qualifying income in the period. The qualifying slice attracts nothing. The non-qualifying slice is taxed at the 9 percent rate this calculator applies, giving AED 18,000. Spread across the full AED 1 million, that is a blended rate of 1.80 percent.
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The lesson is that even a modest amount of non-qualifying income pulls your effective rate off zero. Many founders assume free-zone status means tax-free; in reality it means tax-free only on the qualifying portion.
The de minimis test that can sink everything
There is a separate gate this tool does not model: the de minimis test on non-qualifying revenue. Broadly, if your non-qualifying revenue exceeds a small permitted threshold of total revenue, you can lose Qualifying Free Zone Person status entirely, and then the ordinary 9 percent regime applies to all your income, not just the non-qualifying part. You also need genuine economic substance in the zone. So the comfortable 1.80 percent blended rate in the example only holds if you stay inside the de minimis limits and meet the substance rules. Confirm the current threshold with the FTA and your free-zone authority, because failing it converts a near-zero bill into a full one.
Do free-zone companies still have to register and file?
Yes. Even a company expecting a 0 percent result on all its income must register for corporate tax and file a return. The 0 percent rate is a treatment you claim through filing, not an exemption from the system. Registration deadlines are set by the FTA and missing them can trigger penalties regardless of how little tax is due.
Can I just elect the standard regime instead of qualifying status?
A free-zone company can choose to be taxed under the standard rules, which gives it the AED 375,000 zero-rate band but charges 9 percent above that on all income. Whether that beats qualifying status depends on how much of your income is genuinely qualifying. If most of your revenue is non-qualifying and below a few hundred thousand dirhams, the standard band can sometimes work out better, which is exactly the comparison worth running before you commit.