A rate you can lose without noticing is the dangerous one.
Treating free zone 0% as conditional, not automatic, already puts you ahead of most founders. A rate you build on, price on, and only discover has lapsed when the assessment arrives is worse than one you never had. There is no single trigger. Qualifying status rests on several conditions held together, and it falls the moment any one stops being true.
Five ways a free zone company drops to 9%.
Not a checklist to grade yourself against. Which line you run nearest depends on your facts, and the conditions interact. Clear four, and the fifth can still take the whole rate.
Substance falls short
The real activity, premises, people, and spend in the free zone stop matching the income claimed. Drift below what the activity requires, and the status it underpins drifts with it.
Income stops qualifying
A new customer type or activity moves earnings outside the qualifying category. The usual cause is growth, and the wrong client rarely reads as a tax event.
The de minimis limit is exceeded Most often crossed
Non-qualifying income runs past the small permitted margin. On its own this one line breaks the whole status, and a shifting customer mix tips it quietly.
Accounts are not audited
Without audited financial statements, the income split the 0% relies on cannot be evidenced. The position can be right and still fail for want of proof.
Related-party pricing is off arm's length
Transactions with connected companies priced outside arm's length breach the transfer pricing requirement. Group billing is where this one hides.
Why this is not a self-check
A generic walkthrough tempts you to grade yourself pass when one overlooked line fails you. What you sell, to whom, where the work is really done, and how the group bills itself decides which line is nearest. That reading is an advisory judgement, not a form.
One bad year, five years of 9%.
The duration is what surprises founders. A free zone person that fails the requirements can lose Qualifying Free Zone Person status for that tax period and the four that follow, so one customer mix tipping the de minimis line puts 0% out of reach for five years in a row.
0% to 9%, for the period and the next four. Most triggers show early, which is the reason to watch the lines before one is crossed.
The thresholds are law, not pricing: the standard corporate tax rate is 9%, the 0% applies to qualifying income, and a breach can carry for the period and the following four. These are eligibility facts. Where your company falls against them is the judgement, and we work that out with you before a line is crossed.
Losing the 0% is rarely a decision. It is a drift, and a drift is something to watch.
We look at where your real activity, customer mix, income split, and records sit against the conditions, and flag when you are approaching a line, not after you have crossed it. When the safer answer is to restructure, or to accept a 9% position rather than risk a five-year loss, we say so plainly, so a fixable slip never becomes a five-year one. The QFZP explainer sets out the conditions in depth, and the free zone 0% question covers how the rate is reached in the first place.
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