The Ministry of Finance has announced significant changes regarding the activities eligible and excluded in free zones for corporate tax purposes. These modifications aim to bring clarity and alignment with international tax standards, emphasizing the Ministry’s commitment to enhancing the business environment in the UAE. The new directives will not only expand the range of eligible activities but also streamline processes for stakeholders, reflecting the crucial role of free zones in the country’s economic development strategy.
Details of the New Ministerial Decisions
The ministry has rescinded Ministerial Decision No. “265” of 2023, replacing it with Ministerial Decision No. “229” of 2025 concerning eligible and excluded activities. This new decision clarifies the scope of eligible activities for corporate tax within free zones. Notably, the updates broaden the list of qualifying goods, now including industrial chemicals, related by-products, and environmentally friendly products. Additionally, there are clarifications regarding treasury services and financing for related parties.
Guidelines for Pricing Reports
Alongside the changes in eligible activities, the Ministry has issued Ministerial Decision No. “230” of 2025, which specifies the accredited entities responsible for preparing price reports in line with the definitions set forth in Ministerial Decision No. “229” regarding the eligible and excluded activities. This structured approach will provide taxpayers with greater clarity and certainty regarding the prices of goods in the free zones, ensuring informed decision-making.
The Importance of Free Zones
The Ministry emphasizes the pivotal role that free zones play in driving economic growth, attracting investments, and providing a conducive business atmosphere. These new regulations underscore the significance of free zones in the UAE’s economic diversification strategy and its commitment to supporting businesses. By aligning with international tax standards, the UAE reinforces its position as a leading global business and investment hub.
Expanded Scope of Eligible Activities
Delving deeper into the specifics of Ministerial Decision No. “229” of 2025, the scope of eligible goods now excludes the previously specified term “the goods in their raw form.” The decision permits the trade of metals, minerals, industrial chemicals, energy products, and agricultural goods, provided they have an “announced price.” This “announced price” refers to the approved market price established by a recognized trading market or pricing authority designated by the Minister.
Additionally, the developments foster new investment avenues for taxpayers involved in qualified treasury and financing activities related to connected parties. The updates further state that the distribution of goods and materials from a designated area may encompass transactions with public benefit entities, without affecting the minimum revenue requirements for eligible entities operating within the free zone. The competitive corporate tax framework, complemented by unprecedented preferential rates for eligible activities, fortifies the UAE’s standing as a premier global business and investment center while supporting its sustainable development agenda.