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On July 14, 2026, the UAE Federal Tax Authority published FTA Decision No. 6 of 2026 — a decision that introduces significant additional compliance requirements for Qualifying Free Zone Persons (QFZPs) engaged in the distribution of goods or materials in or from a Designated Zone. If your free zone business claims the 0% Corporate Tax rate under the QFZP regime and distribution is your qualifying activity, this decision directly affects you.

What Is the Decision About?

Under Ministerial Decision No. 84 of 2025, QFZPs are required to prepare and maintain audited financial statements. Article 2(3) of that decision also flagged that QFZPs engaged in distribution activities would need to comply with “any additional procedures prescribed by the Federal Tax Authority.” FTA Decision No. 6 of 2026 is the FTA delivering on that promise — and the requirements are substantial.

The core requirement is this: affected QFZPs must now obtain an Agreed-Upon Procedures (AUP) Report from an independent auditor and submit it to the FTA.

Who Is Affected?

This decision applies to any Qualifying Free Zone Person that claims the qualifying activity of distributing goods or materials in or from a Designated Zone. It is effective for tax periods starting on or after 1 January 2026 — which means for most businesses with a calendar year, the current tax period is already in scope.

If your free zone entity distributes goods from a Designated Zone (such as JAFZA, KIZAD, or other designated free zones) and you rely on the 0% QFZP tax rate, you need to act now.

What Must the AUP Report Demonstrate?

The AUP report must confirm two critical things:

1. Your Customers Are Resellers

The QFZP must demonstrate that it supplies goods or materials to customers who:

• Resell the goods
• Resell parts of the goods
• Process or alter the goods for subsequent sale or resale

This means selling to end consumers does not qualify. Your customer base must be other businesses that onward-sell what you distribute.

2. Imports Enter Through a Designated Zone

Where goods are imported by the QFZP, those goods must enter the UAE through a Designated Zone. This must be supported by customs declarations, import permits, bills of lading, and other transport documentation.

What Documentation Do You Need to Maintain?

To support the AUP report, QFZPs must maintain:

Customer reseller evidence:

• Trade licences of customers
• Signed customer declarations confirming reseller status
• Sales agreements and invoices demonstrating onward resale

Import documentation:

• Customs/import declarations
• Customs clearance documents
• Bills of lading, airway bills, and other transport documents showing entry through a Designated Zone
• Confirmation that the specific free zone, port, or area is formally designated as a Designated Zone under relevant Cabinet Decisions

Internal records:

• Inventory logs
• Warehousing reports
• Goods movement records
• Logistics documentation showing goods were received, handled, or stored within a Designated Zone

What Will the Auditor Do?

The AUP report must be prepared in accordance with ISRS 4400 (Agreed-Upon Procedures Engagements) issued by the IAASB. The auditor will perform the following procedures:

1. Inspect a sample of trade licences or similar customer documents to verify reseller activity (trading, wholesaling, distribution)
2. Obtain signed written declarations from a sample of customers confirming their reseller status
3. Review a sample of executed sales agreements, invoices, and transactional records issued by the QFZP
4. Inspect a sample of import-related documents — customs declarations, import permits, bills of lading — to verify goods entered through a Designated Zone
5. Confirm Designated Zone status for sampled imports by verifying the free zone, port, or area is formally designated under Cabinet Decisions
6. Inspect internal records — inventory logs, warehousing reports, goods movement records — to verify goods were handled within a Designated Zone

The auditor uses sampling rather than testing every transaction. The sample size formula is: Sample Size = Sample Population / (1 + (Sample Population × 10%²)). Importantly, the sample must include the highest-value transactions in the relevant tax period.

Submission Deadline

The AUP report must be submitted to the FTA no later than 30 days after the Corporate Tax return filing deadline for the relevant tax period — or any other date specified by the FTA. For businesses with a December 31 year-end, the CT return deadline is September 30, meaning the AUP report would be due by October 30.

What Happens If You Don’t Comply?

The consequences are severe:

• The QFZP will be considered to have not satisfied the conditions of Ministerial Decision No. 84 of 2025 regarding audited financial statements
• The qualifying activity of distributing goods or materials in or from a Designated Zone will be deemed not met
• This jeopardizes the entity’s QFZP status and the associated 0% Corporate Tax rate on qualifying income
• Your free zone business could be taxed at the standard 9% Corporate Tax rate on all income

What Should You Do Now?

Given that this decision applies to the current tax period (starting January 1, 2026 for most businesses), you should:

1. Assess whether you’re in scope — Does your free zone entity distribute goods in or from a Designated Zone? Is distribution your qualifying activity for QFZP status?
2. Collect customer reseller evidence — Obtain trade licences, signed declarations, and sales agreements from your customers confirming they resell the goods you supply
3. Organize import documentation — Ensure all customs declarations, bills of lading, and transport documents clearly show goods entering through a Designated Zone
4. Maintain internal records — Keep detailed inventory logs, warehousing reports, and goods movement records
5. Engage your auditor early — The AUP report requires specific procedures and sampling. Don’t wait until the last minute. Coordinate with your auditor now to plan the testing approach
6. Plan for the submission deadline — Know your CT return filing date and ensure the AUP report is ready within 30 days after that

The Bigger Picture

This decision reflects a broader trend in UAE tax regulation — the FTA is moving from broad principles to specific, operational compliance requirements. The QFZP regime offers a powerful 0% tax rate, but the FTA is making it clear that this benefit comes with rigorous documentation obligations.

For free zone distributors, the message is unambiguous: prove your customers are resellers, prove your imports come through Designated Zones, and have an independent auditor verify it all. The 0% rate is not automatic — it must be earned through compliance.

FSH Financial Consultants FZE can assist with AUP report preparation, QFZP compliance reviews, and coordination with auditors. Contact us to ensure your free zone status is protected.

FSH Financial Consultants FZE — UAE Corporate Tax, Transfer Pricing, and IFRS Advisory.

Sources: FTA Decision No. 6 of 2026; Ministerial Decision No. 84 of 2025; Crowe UAE analysis (July 15, 2026); FTA Legislation portal (tax.gov.ae).