UAE Ministry of Finance released two significant decisions wherein changes have been made to qualifying income and activities in free zones

Two important decisions have been made public by the UAE Ministry of Finance: Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 265 of 2023. Certain income and activity requirements in free zones have changed as a result of these rulings.

"Undersecretary of the Ministry of Finance Younis Haji Al Khoori states that free zones are essential to the UAE's economic growth because they draw foreign direct investment and create a conducive business environment." "The UAE's economic diversification strategies and commitment to complying with international taxation standards are reflected in these new decisions, which underscore the free zones' ongoing significance."

"The certainty of a competitive Corporate Tax regime and offering a special regime for Free Zones cements the UAE's position as a leading global hub for business and investment and drives its sustainable development agenda," he continued.

Cabinet Decision No. 100 applies to revenue from the ownership or use of Qualifying Intellectual Property. It does this by using the modified nexus approach of the OECD, which is described in Ministerial Decision No. 265 of 2023. The trading of qualifying commodities is listed as a qualifying activity by Ministerial Decision No. 265, which permits revenue from the actual physical trading of different commodities on approved stock exchanges to be taxed at a corporation tax rate of 0%. In such trading operations, it also includes the revenue from derivative trading that is utilised to hedge risk.

Additionally, the Ministerial Decision gives free zone enterprises transparency by defining the parameters of qualifying and excluding activities.