New Decisions regarding Qualifying Activities and Excluded Activities for Qualifying Free Zone Persons

12 September 2025 – The United Arab Emirates (UAE) Ministry of Finance (MoF) has recently released two Ministerial Decisions relevant to Free Zone Persons:

• Ministerial Decision (MD) No. 229 of 2025 on Qualifying Activities and Excluded Activities for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, issued on 28 August 2025 (which repeals earlier MD 265 of 2023) and
• MD No. 230 of 2025 on Determination of Recognized Price Reporting Agencies (RPRAs) for the Purposes of above MD No. 229 of 2025.  

Both decisions are effective retroactively from 1 June 2023.

Together, they refine the framework set out for the Free Zone entities to be considered as a Qualifying Free Zone Person (QFZP) which governs how Qualifying Income and Qualifying/Excluded Activities are defined for a QFZP regime.

In this alert, we have summarized the major and substantive changes brought in through the aforesaid new regulations.

Updates under MD 229 of 2025

I- Trading of Qualifying Commodities

1-  The Decision has revised the definition of Qualifying Commodities (which was a much needed and welcomed clarification for the relevant industries) and made few other amendments, including the following:

• The requirement of being traded on a Recognized Commodities Exchange Market in “raw form” has been removed and replaced with the condition that a Quoted Price for such commodities exists. 
• The MDs further clarifies that, to be considered as Qualifying Commodity, a quoted price for such commodities should exist as specified by recognized commodities exchange market or from the listed RPRA. 
• In addition to the previously referred commodities (i.e., metals, minerals, energy, and agricultural commodities) the scope of Qualifying Commodities was expanded to include:
  
  
  • Industrial chemicals
  • Associated by-products of the above-mentioned commodities, and
  • Environmental commodities such as carbon credits and renewable energy certificates.
• Definition specifically excludes those products which are packaged for retail sale or any other products to be specified.

2- Other new definitions added

• Quoted Price - of the Qualifying Commodity or a Related Commodity as specified by a Recognized Commodities Exchange Market (RCEM) or a RPRA.
• Associated By-product - incidental or secondary product made during the production or extraction of the metal, mineral, industrial chemical, energy, and agricultural commodity. 
• Related Commodity - commodity listed in the same chapter in the Common Schedule for Classification and Coding of Goods as a Qualifying Commodity that has a Quoted Price.
• Common Schedule for Classification and Coding of Goods – the Common Schedule for the Classification and Coding of Goods for the Gulf Cooperation Council Countries adopted pursuant to Cabinet Decision No. 119 of 2024 referred to above or any legislation that amends or replaces it.

The aforementioned definitions provide for much-needed clarifications with respect to Trading of Qualifying Commodities Activity falling under QFZP relief.

3- Scope of qualifying activity - Trading of Qualifying Commodities

The scope of the activity has been expanded to include structured financing transactions such as prepayment, factoring, forfaiting, countertrade, warehouse receipt financing, export receivable financing, project finance, Islamic trade finance, and streaming arrangements. 

However, the new MD also provides that if a QFZP earns 51% or more of its revenue from distribution, warehousing, logistics, or inventory management functions, then their trading of commodities, associated derivatives or financing transactions will not be considered trading of qualifying commodities. 

II. Treasury and financing services to Related Parties or for its own account
Treasury and financing services provided to related parties were considered as Qualifying Activities. The amended scope of the activity elaborates that treasury and financing activities carried out by Free Zone Person for its own account would also be considered as Treasury and Financing services (subject to meeting other mandatory conditions). This is a clear expansion that supports in-house treasury functions.

III. Distribution of goods or materials in or from a Designated Zone
The decision specifically clarifies that transactions involving distribution activities with Public Benefit Entities are allowed for the purpose of this qualifying activity without impacting the de-minimis threshold if other conditions are met.

Updates under Ministerial Decision 230 of 2025

Ministerial Decision 230 complements MD 229 by listing the RPRAs for determining “quoted price” for Qualifying Commodities.

The decision provides following list of RPRAs: 

1. S&P Global Commodity Insights(Platts & Fertecon)
2. Argus Media
3. ICIS (Independent Commodity Intelligence Services)
4. OPIS (Oil Price Information Service)
5. RIM Intelligence
6. CRU Group
7. Quantum Commodity Intelligence
8. Fastmarkets
9. General Index
10. ICE (Intercontinental Exchange)
11. MONTEL
12. Spark Commodities
13. Expana

By issuing this list, the Ministry has given businesses the acceptable platforms for pricing benchmarks for the determination if those commodities will qualify under ‘Trading of Qualifying Commodities’. In other words, Free Zone companies, trading in specified commodities can only avail the benefit of qualifying activity of trading of qualifying commodities if the prices of such commodities are quoted on the relevant exchanges/agency platforms. 

Key Takeaways
The new decisions mark a positive development of the Free Zone framework and provide greater clarity regarding industry-specific issues. 

The changes under ‘Trading of Qualifying Commodities’ certainly give businesses more flexibility.  However, the new 51%- revenue test ensures that only businesses mainly engaged in commodity trading will qualify for 0% QFZP regime under this specific category.  

Inclusion of the in-house treasury /own account financing is a welcome addition, and it certainly provides clarity on the aspects of income earned on such activities.

Since both the decisions are applicable retrospectively from 1 June 2023, businesses should proactively review the positions already taken and evaluate any corrective or amended measures to ensure they get, or continue to get, benefit from the 0% Free Zone Corporate Tax rate.