FTA Decision No. 6 of 2026: New Compliance Requirements for Qualifying Free Zone Persons Engaged in Distribution Activities
Is Your Free Zone Business Ready for the FTA's New Compliance Requirements?
The UAE Federal Tax Authority (FTA) has introduced Decision No. 6 of 2026, which establishes additional compliance procedures for Qualifying Free Zone Persons (QFPs) engaged in the distribution of goods or materials in or from a Designated Zone. The Decision was issued on 2 June 2026 and applies to tax periods commencing on or after 1 January 2026.
This development is particularly significant for trading and distribution businesses operating in UAE Free Zones. To continue benefiting from the 0% Corporate Tax regime, affected businesses must now satisfy additional documentation and assurance requirements.
In this article, we explain what the new decision means, who it applies to, and how businesses should prepare.
Introduction
The UAE Corporate Tax regime allows eligible Qualifying Free Zone Persons (QFZPs) to enjoy a 0% Corporate Tax rate on qualifying income, provided all prescribed conditions are met.
FTA Decision No. 6 of 2026 strengthens these requirements by introducing additional audit and documentation procedures for businesses involved in the distribution of goods or materials in or from a Designated Zone.
The objective is to ensure that businesses claiming the 0% tax benefit can clearly demonstrate that:
- Their customers qualify as resellers.
- Imported goods enter the UAE through a Designated Zone.
- Supporting documentation is properly maintained.
Independent verification is obtained through an agreed-upon procedures engagement.
Who Does This Decision Apply To?
This Decision applies specifically to:
- Qualifying Free Zone Persons (QFZPs); and
- Businesses carrying out the distribution of goods or materials in or from a Designated Zone as a qualifying activity under the UAE Corporate Tax regime.
Examples include:
- Trading companies
- Wholesale distributors
- Import/export businesses
- Industrial distributors
Material suppliers operating from designated Free Zones
What Is the Biggest Change?
Mandatory Agreed-Upon Procedures (AUP) Report
One of the most important requirements introduced by the Decision is that affected businesses must obtain an Agreed-Upon Procedures (AUP) Report from an independent external auditor.
The report must:
- Be prepared by an independent auditor licensed in the UAE.
- Comply with ISRS 4400 – Agreed-Upon Procedures Engagements.
- Verify compliance with the conditions prescribed by the FTA.
This is separate from the annual statutory audit and focuses on verifying specific compliance requirements.
Key Areas the Auditor Must Verify
The agreed-upon procedures engagement must confirm two fundamental conditions:
- Customer Reseller Status
The auditor must verify that customers purchasing goods are genuine resellers or businesses processing the goods for onward sale or resale.
Supporting documents may include:
- Valid trade licences
- Customer declarations
- Written confirmations
- Sales agreements
- Purchase orders
- Commercial invoices
- Other transactional records
- Import Through a Designated Zone
Where goods are imported, the auditor must verify that they entered the UAE through a Designated Zone.
Evidence includes:
- Customs declarations
- Import permits
- Bills of lading
- Airway bills
- Shipping documents
- Customs clearance records
Documentation Business Must Maintain
Businesses should ensure they retain sufficient documentation, including:
Customer Documentation
- Valid trade licences
- Customer declarations
- Reseller confirmations
- Sales contracts
- Invoices
- Purchase orders
Import Documentation
- Customs declarations
- Shipping documents
- Bills of lading
- Airway bills
- Logistics records
- Warehouse documentation
- Inventory movement reports
How Will the Auditor Perform the Review?
The Decision sets out detailed agreed-upon procedures, including:
- Inspection of customer trade licences
- Verification of customer declarations
- Review of sales agreements and invoices
- Inspection of import documentation
- Confirmation that imports entered through a Designated Zone
- Review of internal inventory and warehouse records
Sampling Methodology
Rather than reviewing every transaction, the Decision introduces a formal sampling approach.
The auditor must:
- Determine the sample size using the prescribed formula.
- Include transactions with the highest values.
- Document the procedures performed and factual findings.
- Include details of the selected samples in the report appendix.
Submission Deadline
The Agreed-Upon Procedures Report must be submitted to the FTA:
- Within 30 days after the Corporate Tax return filing deadline, unless the FTA specifies otherwise.
Businesses should incorporate this deadline into their annual Corporate Tax compliance calendar.
What Happens If You Don't Comply?
Failure to submit the required Agreed-Upon Procedures Report means the relevant compliance conditions for the qualifying activity will not be considered satisfied.
For businesses relying on the 0% Corporate Tax regime, this makes timely compliance particularly important.
Practical Framework for Businesses
Step 1
Identify whether your Free Zone entity performs qualifying distribution activities.
Step 2
Review your customer documentation.
Step 3
Verify import procedures.
Step 4
Strengthen record-keeping processes.
Step 5
Engage your external auditor early.
Step 6
Complete the agreed-upon procedures engagement before the filing deadline.
Key Takeaways
- ✅ FTA Decision No. 6 of 2026 is effective for tax periods beginning on or after 1 January 2026.
- ✅ Applies to Qualifying Free Zone Persons engaged in qualifying distribution activities.
- ✅ Requires an Agreed-Upon Procedures Report prepared under ISRS 4400.
- ✅ Businesses must maintain detailed customer and import documentation.
- ✅ The auditor must perform prescribed verification procedures.
- ✅ The report must generally be submitted within 30 days after the Corporate Tax return filing deadline.
Conclusion
FTA Decision No. 6 of 2026 marks another important step in strengthening the UAE’s Corporate Tax framework for Free Zone businesses.
Rather than waiting until year-end, businesses should begin reviewing their documentation, internal controls, and import processes now. Early preparation will make the agreed-upon procedures engagement more efficient and reduce compliance risks.
For trading and distribution businesses operating from UAE Free Zones, this is an opportunity to strengthen governance while preserving eligibility for the Corporate Tax benefits available to Qualifying Free Zone Persons.
Need Expert Guidance
At TFAB Accounting & Business Consulting, we help Free Zone businesses navigate UAE Corporate Tax requirements with confidence.
Our services include:
- Corporate Tax Advisory
- Qualifying Free Zone Person (QFZP) Assessments
- Corporate Tax Compliance
- Audit & Agreed-Upon Procedures Support
- Accounting & Bookkeeping
- VAT Advisory
- CFO & Business Advisory
Contact TFAB today to assess your compliance under FTA Decision No. 6 of 2026 and prepare your business for a smooth Corporate Tax reporting process.