Direct Answer
FTA Decision No. 6 of 2026, issued on 2 June 2026, introduces a mandatory Agreed-Upon Procedures (AUP) report for Qualifying Free Zone Persons (QFZPs) that distribute goods or materials in or from a Designated Zone. The requirement applies to tax periods beginning on or after 1 January 2026.
A QFZP relying on this qualifying activity must appoint an independent UAE-licensed external auditor to perform specified procedures and issue an AUP report under International Standard on Related Services (ISRS) 4400.
Failure to obtain and submit the required AUP report means the distribution activity does not satisfy the conditions for the QFZP regime. As a result, the 0% Corporate Tax rate on the relevant qualifying income may be lost for that tax period.
The AUP report must be submitted within 30 days after the legal Corporate Tax return filing deadline. This period is calculated from the statutory filing deadline, not from the date the company actually files its return.
Sources: FTA Decision No. 6 of 2026; Ministerial Decision No. 229 of 2025; Ministerial Decision No. 84 of 2025.
Key Takeaways for QFZPs
- FTA Decision No. 6 of 2026 introduces an annual AUP reporting requirement for QFZPs distributing goods or materials in or from a Designated Zone.
- The requirement applies to tax periods beginning on or after 1 January 2026.
- For most businesses with a calendar financial year, 2026 is the first affected tax period.
- The AUP report is a separate compliance requirement and is not a replacement for the annual financial statement audit.
- The AUP engagement must be performed by an independent auditor licensed to practise in the UAE.
- The same auditor may perform both the annual financial statement audit and the AUP engagement, provided the relevant requirements are met.
- The AUP report is due 30 days after the legal Corporate Tax return deadline.
- The auditor must verify key conditions relating to customer classification and Designated Zone entry and handling of goods.
- QFZPs should maintain contracts, invoices, customs records, shipping documents, warehouse records, inventory records and other supporting evidence.
- The requirement does not change the Corporate Tax rate. Instead, it introduces an additional verification requirement for businesses relying on the qualifying distribution activity to access the 0% rate.
What Is the QFZP Distribution Qualifying Activity?
Under Ministerial Decision No. 229 of 2025, the distribution of goods or materials in or from a Designated Zone is one of the activities that can qualify for the 0% Corporate Tax rate available to a Qualifying Free Zone Person.
A Designated Zone is a specific customs and tax area subject to particular customs controls that distinguish it from mainland UAE and standard free zones. Examples referenced in the source material include JAFZA, Dubai Airport Free Zone and Abu Dhabi’s Khalifa Industrial Zone.
For the distribution activity to qualify, goods must enter the UAE through the Designated Zone, be handled, stored or managed there, and then be distributed to customers in the UAE or exported.
The qualifying activity is therefore linked to the actual movement and handling of goods within the Designated Zone. The business must be able to demonstrate that the distribution operations genuinely take place within the relevant controlled environment.
FTA Decision No. 6 of 2026 does not redefine the qualifying distribution activity. Instead, it introduces a standardised annual verification process requiring an independent auditor to establish factual findings concerning whether the relevant conditions were met during the tax period.
What Does the AUP Report Check?
The AUP engagement focuses on specific factual matters rather than providing an overall audit opinion.
| Procedure area | What the auditor checks | Key supporting documents |
|---|---|---|
| Customer classification | Whether customers are genuine resellers of the distributed goods or processors that use the goods in production. Customers purchasing goods for personal use or non-business consumption do not satisfy the relevant distribution conditions. | Customer contracts, trade licences, evidence of business activity, sales invoices and delivery records |
| Designated Zone entry and handling | Whether goods imported into the UAE for distribution entered through and were handled within a Designated Zone before being distributed to customers. | Customs entry records, warehouse records, inventory documentation, shipping records and logistics records |
| Documentation completeness | Whether sufficient records have been maintained to support the customer classification and Designated Zone entry conclusions. | Contracts, invoices, customs records, warehouse records, inventory records, shipping documents and accounting records |
Sampling may be used as part of the ISRS 4400 AUP procedures, meaning the auditor does not necessarily have to review every transaction or document.
Source: FTA Decision No. 6 of 2026; Ministerial Decision No. 84 of 2025; Ministerial Decision No. 229 of 2025.
Is the AUP Report the Same as the Annual Audit?
No.
The AUP report is a separate engagement from the annual financial statement audit.
A QFZP can use the same UAE-licensed auditor for both engagements. However, the two engagements have different purposes and are performed under different professional standards.
The annual financial statement audit is conducted under the International Standards on Auditing and results in an audit opinion on the financial statements.
An AUP engagement under ISRS 4400 does not provide an audit opinion or assurance. Instead, the auditor performs specific procedures agreed in advance and reports the resulting factual findings.
This distinction is important because the AUP report requires its own planning, procedures, supporting evidence and reporting process.
Businesses should therefore avoid treating the AUP as a simple addendum to their annual audit. Early coordination with the auditor can help reduce the risk of delays, particularly where significant transaction volumes or extensive customs and logistics records are involved.
When Should QFZPs Start Preparing for the AUP?
QFZPs should prepare their documentation throughout the financial year rather than waiting until year-end.
For example, a QFZP with a 31 December 2026 year-end would have a legal Corporate Tax return deadline of 30 September 2027. The AUP report would then be due 30 days later, on 30 October 2027.
However, the AUP procedures depend on transaction records covering the full financial year. Businesses that wait until 2027 to organise their records may have to complete AUP preparation alongside year-end accounting, the financial statement audit and Corporate Tax return preparation.
Maintaining appropriate documentation throughout 2026 can make the AUP process more efficient and reduce last-minute compliance risks.
Which QFZPs Are Subject to the AUP Requirement?
The requirement specifically applies to QFZPs that rely on the qualifying activity of distributing goods or materials in or from a Designated Zone under Ministerial Decision No. 229 of 2025.
It does not automatically apply to every free zone company or every QFZP.
QFZPs carrying out other qualifying activities, including activities such as fund management, ship operations, aircraft operations, wealth management or headquarters services, are not directly subject to this specific AUP requirement based on the source material.
The key question is therefore whether the business is a QFZP and is relying on the Designated Zone distribution activity for its qualifying income.
What Records Should a QFZP Maintain?
Businesses relying on the qualifying distribution activity should maintain clear records demonstrating that the relevant conditions were met.
Key documents include:
- Customer contracts
- Customer trade licences
- Evidence of customer business activities
- Sales invoices
- Delivery records
- Customs entry documents
- Warehouse and storage records
- Inventory records
- Shipping and logistics documents
- Accounting records
- Evidence showing receipt and movement of goods through the Designated Zone
Keeping these records organised throughout the tax period can help the auditor complete the AUP procedures efficiently and support the company’s position if the FTA requests evidence.
What Happens If the AUP Report Is Missed?
If the required AUP report is not obtained and submitted within the prescribed timeframe, the qualifying distribution activity may be treated as failing to meet the conditions of the QFZP regime.
The relevant income can therefore lose its 0% Corporate Tax treatment and become subject to the standard 9% Corporate Tax rate for the relevant period.
This makes the AUP requirement more than an administrative filing obligation. For affected QFZPs, it can directly affect the tax treatment of qualifying distribution income.
Can a Different Auditor Prepare the AUP Report?
Yes.
The AUP report must be prepared by an independent auditor licensed to practise in the UAE. The auditor does not necessarily have to be the same firm responsible for the company’s annual financial statement audit.
A QFZP can therefore appoint another UAE-licensed independent auditor for the AUP engagement, subject to the applicable requirements.
When Is the AUP Report Due?
The AUP report must be submitted to the FTA within 30 days after the legal Corporate Tax return filing deadline.
For a QFZP with a 31 December 2026 financial year-end:
| Compliance milestone | Date |
|---|---|
| Financial year-end | 31 December 2026 |
| Corporate Tax return deadline | 30 September 2027 |
| AUP report deadline | 30 October 2027 |
Important
Importantly, the 30-day period is calculated from the legal Corporate Tax return deadline, not the date on which the company actually submits its Corporate Tax return.
For example, filing the Corporate Tax return earlier does not automatically bring forward the AUP deadline.
QFZP AUP Compliance Checklist
Affected businesses can use the following checklist to prepare for the requirement:
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1
Confirm QFZP status.
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2
Confirm that the business relies on the Designated Zone distribution qualifying activity.
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3
Review customer classifications.
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4
Verify that customers are resellers or qualifying processors.
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5
Maintain evidence of goods entering through the Designated Zone.
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6
Maintain warehouse, inventory and logistics records.
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7
Organise invoices, contracts and customs documentation.
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8
Engage a UAE-licensed independent auditor for the AUP procedures.
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9
Coordinate AUP procedures with the year-end accounting and audit timetable.
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10
Submit the AUP report within 30 days after the legal Corporate Tax return deadline.
Frequently Asked Questions
How Can IncHub Support QFZPs?
IncHub Financial Services FZCO supports QFZPs with Corporate Tax compliance and related accounting requirements.
Its services include:
- Corporate Tax return preparation
- EmaraTax filing support
- Coordination with UAE-licensed audit firms for AUP engagement planning
- Bookkeeping and accounting support
- Maintenance of transaction records required for compliance
- Monitoring of relevant FTA guidance and updates
For QFZPs relying on the Designated Zone distribution activity, early preparation can help ensure that the documentation required for the AUP engagement is available when the auditor begins the procedures.
Need help preparing for the QFZP AUP requirement? Contact IncHub to discuss your Corporate Tax compliance and AUP coordination requirements.
Protect Your QFZP 0% Corporate Tax Status
Ensure your Designated Zone distribution meets AUP requirements with IncHub’s Corporate Tax and AUP support.
Speak to a QFZP Tax Advisor
Sources and References
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