There has been a relevant development regarding Corporate Tax in the UAE that directly affects Spanish structures with distribution activity in the Emirati market.
The Federal Tax Authority has issued Decision No. 6 of 2026, dated 2 June 2026. It introduces an additional requirement for Qualifying Free Zone Persons (QFZP) whose activity consists of the distribution of goods or materials carried out in or from a Designated Zone.
What is a Designated Zone?
This is a concept distinct from a “free zone” in general. Cabinet Decision No. 59 of 2017, and its subsequent updates, originally defined it as a specific area. To qualify, the area must meet certain physical and control requirements: fencing, customs control points, and internal goods-management procedures. As a result, it is treated as being outside UAE territory for the purposes of certain transactions involving goods.
Not all free zones are Designated Zones. Those that are include, for example:
- Jebel Ali Free Zone (JAFZA)
- Sharjah Airport International Free Zone
- Hamriyah Free Zone
- RAK Free Zone
- Fujairah Free Zone
DMCC/JLT, for example, does not appear on this list. Since the list changes periodically, it is therefore worth verifying case by case: an operationally similar zone may not carry the same tax treatment.
What Decision No. 6 of 2026 introduces
Companies whose distribution activity takes place in or from a Designated Zone must now obtain an Agreed-Upon Procedures (AUP) report every year. An independent external auditor must issue this report in accordance with the ISRS 4400 standard.
This report must verify, among other aspects:
- The resale nature of end customers
- The correct entry of goods through the Designated Zone
Deadline and consequences of non-compliance
Companies must submit the AUP report to the FTA within 30 days following the deadline for filing the Corporate Tax return for the relevant period.
Otherwise, the FTA may treat the qualifying activity as non-compliant. The practical consequence is direct: companies then risk losing the 0% Corporate Tax treatment on that income.
When it takes effect
The rule applies to tax periods beginning on or after 1 January 2026. In practice, this means affected companies should already be organizing the external audit procedure now, so they do not reach the deadline without the report in place.
What your company should review
If your UAE structure includes distribution activity, there are three checks worth carrying out as soon as possible:
- Confirm whether your zone qualifies as a Designated Zone under the current list
- Assess whether your activity falls within the distribution scenario covered by the Decision
- Identify a qualified external auditor to issue the AUP report in accordance with ISRS 4400
From our Dubai office, we support this review alongside a broader assessment of your structure’s exposure to this and other developments in the UAE tax regime.
For more information on setting up and operating in the United Arab Emirates, visit our UAE section or contact our Dubai team directly.
Official source: Federal Tax Authority.
