The Federal Tax Authority (‘FTA’) has released a consolidated summary of the private clarifications issued up to May 2026. Presented in a question-and-answer format, the summary sets out the FTA’s position and interpretation on a wide range of Corporate Tax matters, providing taxpayers with valuable insight into FTA’s approach to fact-specific scenarios.
The summary covers several key areas of the UAE Corporate Tax regime, including exempt persons (such as Qualifying Investment Funds, Qualifying Limited Partnerships and REITs), permanent establishment, unincorporated and foreign partnerships, family foundations, taxable income, participation exemption, allowable deductions, losses, tax groups, registration requirements for specific scenarios, financial statements, tax periods and transitional relief.
A substantial portion of the summary is dedicated to Qualifying Free Zone Persons (‘QFZPs’). The FTA has provided a detailed guidance on the various conditions and case-specific scenarios relevant to Qualifying Activities. These include processing of goods or materials, trading of Qualifying Commodities, holding of shares and securities for investment purposes, ownership, management and operation of ships, reinsurance services, wealth and investment management services, headquarter services to Related Parties, treasury and financing services to Related Parties or for own account), financing and leasing of aircraft, distribution of goods or materials in or from a Designated Zone, logistics services, and ancillary activities.
The FTA has also provided guidance on the adequate substance requirement for QFZPs, including guidance on office and workspace requirements, the use of employees who hold visas from Related Parties, the performance of core income-generating activities, and the determination of the “Beneficial Recipient” in the context of distribution of goods or materials.
Some notable clarifications include:
- A Free Zone Person may retain QFZP status even where related party transactions have not been recorded on an arm’s length basis in its financial statements, provided an appropriate transfer pricing adjustment is made in the Corporate Tax return.
- The participation exemption may be available in respect of dividends from a Saudi company subject to Zakat (treated as meeting the 9% tax requirement).
- A foreign partnership may lose its tax-transparent status where the prescribed annual declaration is not submitted to the FTA.
Please click here to download the FTA Private Clarifications