UAE CT​: New Ministerial Decisions No. 229 and No. 230 of regarding Qualifying Free Zone Persons Regime

In Detail

Qualifying Commodities​​

• MD 229 expands the definition of Qualifying Commodities to also (besides metals, minerals energy and agriculture commodities) include: industrial chemicals, Associated By-Products of any of these commodities, and environmental commodities (e.g. carbon credits or renewable energy certificates).​

• Associated By-Product is an incidental or secondary product made during the production orextraction of a commodity. The definition specifically excludes products packaged for retailsale and any other products specified in a decision issued by the Minister.

• Commodities are Qualifying Commodities provided a Quoted Price for such commodities exists. A Quoted Price is defined as the Price of the Qualifying Commodity or a Related Commodity specified by a Recognised Commodity Exchange Market ora recognised price reporting agency (the list is specified in MD 230).​

• A Related Commodity is any commodity that is listed in the same chapter in the Common Schedule for Classification and Coding of Goods as a Qualifying Commodity that has a Quoted Price.​​

• Trading of Qualifying Commodities is clarified to include the physical trading of Qualifying Commodities, associated financial derivatives trading used to hedge against risks involved in such activities and associated structured commodity financing activity.​​

• It is required that this activity must not be conducted by a Qualifying Free Zone Person whose Revenue from distribution, warehousing, logistics or inventory management functions constitutes 51% or more of their Revenue for the relevant Tax Period. Structured commodity financing activity includes prepayment, factoring, forfaiting, countertrade, warehouse receipt financing, export receivable financing, project finance, Islamic trade finance and streaming financing.

Qualifying Activities ​

• MD 229 also provides an update to the Qualifying Activity to expand “Treasury and financing services to Related Parties” to “Treasury and financing services to Related Parties or for its own account”.

• “Distribution of goods or materials in or from a Designated Zone” is clarified that such activities will be deemed Qualifying where they are conducted in or from a Designated Zone, and the goods or materials entering the State are imported through the Designated Zone, and the goods or materials are supplied to any of the following:

  • A customer who resells, processes or alters such goods or materials, or parts there off or the purpose of sale or resale, ​

  • A public benefit entity.

Audited Financial Statements ​

• Article 5 is also updated to provide that a Qualifying Free Zone Person must prepare audited financial statements in accordance with Ministerial Decision No. 84 of 2025 (as updated/replaced).