The Federal Tax Authority (FTA) has issued FTA Decision No. 6 of 2026 (the Decision), introducing new compliance requirements for Qualifying Free Zone Persons (QFZPs) engaged in the qualifying activity of distribution of goods or materials in or from a Designated Zone (concerned QFZPs), applicable from tax periods commencing on or after 1 January 2026.
The Decision mandates the concerned QFZPs to obtain Agreed Upon Procedure (AUP) Report from UAE licensed independent auditor - which documents the procedures performed and related findings, to demonstrate that the supplies made by the concerned QFZPs are to the qualifying reseller customers or to public benefit entities, and that goods imported into the UAE are through a Designated Zone.
The Decision essentially supplements the existing legislative framework and the self-assessment principle by introducing a mandatory audit driven process which prescribes for document collection and retention requirements, audit procedure to be performed, and reporting obligations.
The AUP Report must be submitted by the concerned QFZPs to the FTA within 30 days following the deadline for filing the CT Return for the relevant tax period.
Failure to submit the AUP report within the prescribed timeline could entail that the relevant conditions applicable to concerned QFZPs are not satisfied, which could in-turn impact the concerned QFZP's eligibility to claim the 0% Corporate Tax regime.
Accordingly, businesses should consider assessing their compliance readiness, documentation processes and reporting procedures well in advance of the applicable deadlines to support continued eligibility under the QFZP regime.
The concerned QFZP must obtain an AUP Report from:
The Decision also sets out a prescribed sampling methodology for the selection of items to be tested during the AUP engagements.
BDO can assist the concerned QFZPs in understanding and implementing the above requirements, helping businesses assess the impact of the new requirement on their distribution activities and maintain compliance with the conditions for benefiting from the 0% Corporate Tax regime.
For further assistance, please contact the BDO UAE Corporate Tax team.
The Decision mandates the concerned QFZPs to obtain Agreed Upon Procedure (AUP) Report from UAE licensed independent auditor - which documents the procedures performed and related findings, to demonstrate that the supplies made by the concerned QFZPs are to the qualifying reseller customers or to public benefit entities, and that goods imported into the UAE are through a Designated Zone.
The Decision essentially supplements the existing legislative framework and the self-assessment principle by introducing a mandatory audit driven process which prescribes for document collection and retention requirements, audit procedure to be performed, and reporting obligations.
Submission Timeline
The AUP Report must be submitted by the concerned QFZPs to the FTA within 30 days following the deadline for filing the CT Return for the relevant tax period.
Consequences of non-compliance
Failure to submit the AUP report within the prescribed timeline could entail that the relevant conditions applicable to concerned QFZPs are not satisfied, which could in-turn impact the concerned QFZP's eligibility to claim the 0% Corporate Tax regime.Accordingly, businesses should consider assessing their compliance readiness, documentation processes and reporting procedures well in advance of the applicable deadlines to support continued eligibility under the QFZP regime.
Key Requirement in relation to AUP Report
The concerned QFZP must obtain an AUP Report from:
- the external auditor responsible for the annual statutory audit, or
- any other independent auditor licensed in the UAE.
- supplies are made to qualifying reseller customers or to public benefit entities, and
- that goods imported into the UAE are through a Designated Zone
Key Verification Areas for the AUP
| Key Area | Document(s) to be obtained | Procedure to be performed | Factual findings to be documented |
| Verification of Customer Reseller Status | Customer trade License or any equivalent document | Verify whether the listed business activities are indicative of reselling of the goods or materials, or parts thereof | State whether the business activities are consistent with the activities of a reseller of the goods or materials, or parts thereof |
| Customer Declarations or Confirmations | Verify that declarations or confirmations affirm customer’s status as resellers of the goods or materials, or parts thereof, and verify whether such declarations are signed, dated, and relate to the relevant Tax Period |
Prepare a report on the presence of such declarations and whether such declarations affirm the customer’s status as a reseller of the goods or materials, or parts thereof |
|
| Sales Agreements and Other Transactional Records | Identify and document terms or features of onward sale or resale activity for the relevant goods or materials. |
Document whether the reviewed records reflect qualifying reseller characteristics of resale or onward supply of the goods or materials, or parts thereof; | |
| Verification of Import through Designated Zone | Import Documentation | Inspect import documentation to verify that the goods or materials were imported into the State through a Designated Zone | Report whether the documentation for each sample confirms that importation occurred through a Designated Zone |
| Confirmation obtained by concerned QFZPs from relevant Free Zone Authority on the Designated Zone Status | Verify that the Free Zone, port, or area identified in the import documentation is formally designated as a “Designated Zone” pursuant to relevant Cabinet Decisions, or other legislation in force in the State. This should be confirmed by the relevant Free Zone Authority to the Qualifying Free Zone Person. |
Confirm whether the relevant Free Zone through which the importation is undertaken is officially recognized as a Designated Zone under the applicable legal instruments | |
| Internal Records | Obtain and inspect internal records maintained by the Qualifying Free Zone Person, to verify that the goods or materials were received, handled, or stored within a Designated Zone prior to distribution |
Report on the internal records evidencing importation through a Designated Zone |
The Decision also sets out a prescribed sampling methodology for the selection of items to be tested during the AUP engagements.
Key takeaways for the concerned QFZPs:
- Consider engaging with the external auditor early to discuss the scope and expectations of the AUP engagement.
- Review existing processes and documentation practices to identify opportunities for enhancement.
- Consider the potential Corporate Tax implications that may arise where the relevant conditions are not satisfied.
- Monitor compliance deadlines, with the AUP report due within 30 days of the Corporate Tax return filing deadline for tax periods commencing on or after 1 January 2026.
- Collection and retention of supporting documentation to evidence reseller status and Designated Zone imports shall be necessary, as retrospective compilation may be burdensome.
Business Actions and BDO Support
BDO can assist the concerned QFZPs in understanding and implementing the above requirements, helping businesses assess the impact of the new requirement on their distribution activities and maintain compliance with the conditions for benefiting from the 0% Corporate Tax regime.
BDO can assist with:
- Assessing the impact of the new requirements on your qualifying distribution activities
- Review of compliance readiness and identifying potential gaps
- Conducting AUP engagements and issuing the required AUP report
- Supporting AUP readiness, including documentation reviews and auditor liaison
- Providing ongoing Free Zone advisory support to help safeguard QFZP status and access to the 0% Corporate Tax regime.
For further assistance, please contact the BDO UAE Corporate Tax team.