Emirates: The UAE Ministry of Finance has unveiled two new ministerial decisions that provide greater clarity on how Free Zone companies will be treated under the country’s corporate tax regime.

The announcements, made on Wednesday, highlight the government’s continued commitment to making the UAE one of the most competitive and transparent business hubs in the world.

The first update, Ministerial Decision No. (229) of 2025, replaces an earlier ruling from 2023 and sets out clearer guidance on which activities within Free Zones qualify for preferential corporate tax treatment.

The second, Ministerial Decision No. (230) of 2025, specifies the recognised Price Reporting Agencies that companies can rely on when dealing with qualifying commodities. Together, these measures are designed to give Free Zone businesses more certainty, align practices with international standards, and reinforce the UAE’s role as a sought-after hub for global trade and investment.

At the heart of the update is an expanded definition of 'Qualifying Commodity Trading'. Until now, Free Zone firms could only benefit from the special zero per cent corporate tax rate on commodity trading if the goods were in raw form. The new decision removes that limitation, allowing a much wider range of products to be included.

Qualifying commodities now cover metals, minerals, energy and agricultural goods, industrial chemicals, and even associated by-products. Importantly, the list also includes “environmental commodities”, such as carbon credits—underscoring the UAE’s focus on sustainability and green finance.

For these items to qualify, a Quoted Price must be available. This means the commodity must have a transparent, verifiable price published by either a recognised commodity exchange or one of the approved Price Reporting Agencies listed under Ministerial Decision No. (230). By linking tax benefits to transparent market pricing, the government is helping ensure fairness and preventing abuse of the regime.

The new decision also brings clarity to treasury and financing services. Free Zone companies can now carry out activities such as self-investment and financing of related parties under the qualifying category. This update provides flexibility for holding companies and groups managing their finances centrally, an increasingly common practice among multinational firms operating in the UAE.

Distribution has also been addressed. Companies based in designated Free Zones that distribute goods or materials can do so to public benefit entities without breaching the so-called de-minimis threshold. This ensures that socially valuable transactions do not inadvertently disqualify a business from the preferential Free Zone regime.

The companion Ministerial Decision No. (230) of 2025 establishes the list of recognised Price Reporting Agencies. These agencies are widely used in global commodity markets to provide reliable benchmark prices for metals, energy, and agricultural products. By officially naming them, the Ministry of Finance has given businesses and tax advisers the certainty they need to comply with the rules.

This step also strengthens the UAE’s alignment with global best practices. Many international tax regimes require the use of transparent, third-party pricing sources for commodities, and the UAE’s move ensures that Free Zone companies can operate with confidence in cross-border transactions.

The decisions come at a critical time. Since the corporate tax law came into effect on June 1, 2023, one of the most discussed topics has been how Free Zone entities—key players in the UAE’s economic model—would be treated.

UAE’s free zones host thousands of international companies and are vital to the country’s diversification strategy, particularly in logistics, energy trading, manufacturing, and financial services. Under the corporate tax framework, Free Zone businesses may qualify for a zero per cent tax rate on certain income if they meet strict conditions. However, income from “excluded activities” or non-qualifying transactions may still be taxed at the standard nine per cent rate.

For businesses, the stakes are high. Failure to meet the qualifying criteria in the first year can mean losing eligibility for the zero per cent benefit for the following four years. This makes early compliance and correct classification of activities absolutely crucial.

By expanding the scope of qualifying activities and clarifying the pricing rules, the Ministry of Finance is giving companies a stronger framework for planning their operations. It also underscores the UAE’s dual priorities: maintaining its attractiveness as a global investment hub while ensuring compliance with international tax standards such as the OECD’s Base Erosion and Profit Shifting (BEPS) framework.

The ministry has emphasised that these changes are part of a broader effort to balance competitiveness with transparency. Free Zones remain a central pillar of the economy, contributing to the UAE’s role as a global logistics, finance, and commodities hub. Ensuring that they continue to offer a supportive business environment—without creating loopholes or grey areas—is critical to the country’s long-term growth.

For companies operating in Free Zones, the message is clear: the corporate tax regime offers significant advantages, but only for those who plan carefully and comply fully with the rules. Businesses must review their activities, assess whether they qualify, and ensure that their transactions are backed by transparent market data, says tax experts.