FTA Decision No. 6 of 2026: New Compliance Requirements for Qualifying Free Zone Persons (QFZPs)

The Federal Tax Authority has issued Decision No. 6 of 2026, introducing new compliance obligations for businesses operating as Qualifying Free Zone Persons (QFZPs). These rules apply specifically to QFZPs engaged in the distribution of goods or materials in or from a Designated Zone UAE, and they require affected businesses to obtain a specialized Agreed-Upon Procedures (AUP) Report prepared by an independent auditor. The decision is effective for the tax period starting on or after 1 January 2026.

This article explains the purpose of the decision, who it applies to, the new compliance requirements, documentation obligations, submission deadlines, and the consequences of failing to comply.

Purpose and Scope of FTA Decision No. 6 of 2026

The decision aims to ensure that only genuine distribution businesses operating inside Designated Zones benefit from the Corporate Tax Free Zone UAE regime. It applies exclusively to QFZPs performing the qualifying activity of distributing goods or materials, as defined under Ministerial Decision No. 229 of 2025.

The FTA now requires these entities to demonstrate, through independent verification, that their operations meet the criteria for QFZP compliance. This verification must be documented in a formal AUP Report.

See also: Corporate Tax Consultant

Requirement to Obtain an Agreed-Upon Procedures (AUP) Report

Under FTA Decision No. 6 of 2026, every QFZP engaged in distribution must obtain an AUP Report prepared in accordance with ISRS 4400. The report must be issued by an independent external auditor who is licensed in the UAE.

The AUP Report must confirm two core compliance points:

• The QFZP supplies goods or materials to customers who resell, process, or alter them for onward sale
• Any goods imported by the QFZP enter the UAE through a Designated Zone

These requirements ensure that the QFZP is genuinely performing qualifying distribution activities.

Related: Corporate Tax Audit in UAE

Documentation Requirements for QFZPs

To support the preparation of the AUP Report, QFZPs must collect and retain specific documentation. This is essential for Corporate Tax compliance in the UAE and must be available for auditor review.

Evidence of Customer Reseller Status

The QFZP must maintain documents proving that customers acquire goods for resale or onward supply. Acceptable records include:

• Valid trade or commercial licenses
• Signed declarations confirming resale intent
• Sales agreements, invoices, and purchase orders

These documents help verify that the QFZP’s customers meet the reseller criteria defined in the Corporate Tax legislation.

Evidence of Importation Through a Designated Zone

If the QFZP imports goods, it must retain documents showing that the goods entered the UAE through a Designated Zone. Examples include:

• Import declarations and customs clearance documents
• Bills of lading, airway bills, or equivalent transport documents
• Internal records such as inventory logs or warehouse movement reports

These records demonstrate compliance with the distribution requirements under the Free Zone regime.

How Auditors Perform the Required Procedures

The AUP Report must follow the procedures outlined in FTA Decision No. 6 of 2026. These include:

• Inspecting customer licenses
• Reviewing customer declarations
• Examining sales agreements and invoices
• Inspecting import documentation
• Confirming Designated Zone status
• Reviewing internal inventory and logistics records

Each procedure must be documented with factual findings, not opinions, ensuring transparency and accuracy in the verification process.

Also check: Corporate Tax Services in UAE

Submission Deadline for the AUP Report

The AUP Report must be submitted to the FTA within 30 days after the deadline for filing the Corporate Tax return for the relevant tax period.

This deadline is strict. The decision states that if the report is not submitted on time, the QFZP will be treated as not meeting the conditions for the qualifying activity.

Consequences of Failing to Comply

Failure to comply with FTA Decision No. 6 of 2026 has significant consequences:

• The QFZP will lose its qualifying status for the relevant tax period
• The business will not benefit from the 0% Free Zone tax rate
• The entity becomes fully taxable at 9% for that period

These consequences highlight the importance of meeting all compliance obligations, especially for businesses relying on Free Zone tax benefits.

Practical Implications for Affected Businesses

Businesses operating as QFZPs in distribution must now:

• Review their documentation processes
• Ensure customer reseller evidence is collected consistently
• Confirm importation routes through Designated Zones
• Coordinate with auditors early to prepare the AUP Report
• Implement internal controls to maintain compliance
• Track submission deadlines carefully

These steps are essential to maintain eligibility under the Corporate Tax Free Zone UAE regime and avoid unexpected tax liabilities.

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Ensuring full compliance with FTA Decision No. 6 of 2026 requires accurate documentation, timely reporting, and close coordination with an independent auditor. Many QFZPs will need support to implement the new procedures, maintain proper records, and prepare for the Agreed-Upon Procedures (AUP) engagement.

Farahat & Co. helps Qualifying Free Zone Persons meet all new compliance obligations by providing assessment of QFZP eligibility under the updated rules, review of documentation systems to ensure customers qualify as resellers, verification of importation processes through Designated Zones, preparation support for the AUP engagement including auditor coordination, Corporate Tax compliance reviews to ensure all Free Zone requirements are met, and ongoing advisory to prevent loss of QFZP status.

Contact Farahat & Co. today to discuss your QFZP compliance requirements under FTA Decision No. 6 of 2026.