The second list of qualifying and excluded activities for free zone companies, with the de minimis rule, qualifying intellectual property income and the audited financial statements condition; it repealed Ministerial Decision No. 139 of 2023 and was itself repealed by Ministerial Decision No. 229 of 2025.
Ministerial Decision No. 265 of 2023 was the second list of Qualifying Activities and Excluded Activities for Qualifying Free Zone Persons under Article 18 of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) and Cabinet Decision No. 100 of 2023. It was issued on 27 October 2023, took effect retroactively from 1 June 2023 and repealed Ministerial Decision No. 139 of 2023. It has itself been superseded: Ministerial Decision No. 229 of 2025 repealed it, also with effect from 1 June 2023, so the 2025 decision now governs every Tax Period and this text is kept for the history of the regime and for understanding returns filed before August 2025.
Article 2(1) listed the Qualifying Activities: manufacturing and processing of goods or materials; trading of Qualifying Commodities; holding shares and other securities for investment purposes (held for at least 12 months); ownership, management and operation of Ships in international transport; reinsurance; fund management and wealth and investment management under a UAE Competent Authority; headquarter services to Related Parties; treasury and financing services to Related Parties; financing and leasing of Aircraft; distribution of goods in or from a Designated Zone to customers who resell or process them, with imports entering through the Designated Zone; logistics services; and ancillary activities. Article 2(2) listed the Excluded Activities: transactions with natural persons (except shipping, fund and wealth management and aircraft leasing), banking, insurance (other than reinsurance and captive insurance within headquarter services), finance and leasing (other than shipping, treasury and aircraft leasing), ownership or exploitation of immovable property other than Commercial Property in a Free Zone transacted with a Free Zone Person, and ancillary activities. Article 2(3) defined each activity and Article 2(4) the ancillary test.
Qualifying Commodities were narrower than under the 2025 decision: metals, minerals, energy and agricultural commodities traded on a Recognised Commodities Exchange Market in raw form, with trading limited to physical trading and hedging derivatives. Treasury services had to be for Related Parties, and Designated Zone distribution was limited to reseller and processor customers.
Article 3 set the de minimis test at the lower of 5% of total Revenue and AED 5,000,000 of non-qualifying Revenue. Article 4 set the formula for Qualifying Income from Qualifying Intellectual Property using Qualifying Expenditures with a 30% uplift, Overall Expenditures and Overall Income, with record-keeping duties. Article 5 added the de minimis test and audited financial statements as conditions of Qualifying Free Zone Person status, and provided that a person failing any condition at any time in a Tax Period lost the status from the start of that period and for the following four Tax Periods. Article 6 repealed Ministerial Decision No. 139 of 2023 and Article 7 fixed commencement at 1 June 2023.
Free Zone Persons that claimed Qualifying Free Zone Person status under Article 18 of the Corporate Tax Law for Tax Periods from 1 June 2023, until the decision was replaced by Ministerial Decision No. 229 of 2025 with the same retroactive effective date.
| Article 1 | Defined Qualifying Commodities as metals, minerals, energy and agriculture commodities traded on a Recognised Commodities Exchange Market in raw form, and Competent Authority as the Central Bank, DFSA, FSRA and SCA. |
| Article 2(1) | Qualifying Activities: manufacturing; processing; trading Qualifying Commodities; holding shares and securities for investment; Ship ownership, management and operation; reinsurance; fund management; wealth and investment management; headquarter services to Related Parties; treasury and financing to Related Parties; Aircraft financing and leasing; Designated Zone distribution; logistics; and ancillary activities. |
| Article 2(2) | Excluded Activities: transactions with natural persons (except shipping, fund management, wealth management and aircraft leasing), banking, insurance (other than reinsurance and captive insurance), finance and leasing (other than shipping, treasury and aircraft leasing), immovable property other than Free Zone Commercial Property transacted with a Free Zone Person, and ancillary activities. |
| Article 2(3)(c) | Trading of Qualifying Commodities meant physical trading of Qualifying Commodities and associated derivative trading used to hedge the risks of that activity. |
| Article 2(3)(l) | Designated Zone distribution covered buying and selling tangible goods, with import, storage and export, to customers who resell, process or alter them, provided the activity was conducted in or from a Designated Zone and imports entered through it. |
| Article 3 | The de minimis requirement was met where non-qualifying Revenue in the Tax Period did not exceed the lower of 5% of total Revenue and AED 5,000,000. |
| Article 4 | Qualifying Income from Qualifying Intellectual Property was computed by formula from Qualifying Expenditures with a 30% uplift capped at Overall Expenditures, and Overall Income, with records of ownership, expenditure and income kept for the FTA. |
| Article 5 | A Qualifying Free Zone Person had to meet the de minimis test and prepare audited financial statements; failing any condition at any time in a Tax Period removed the status from the start of that period and for the following four Tax Periods. |
| Articles 6–7 | Repealed Ministerial Decision No. 139 of 2023; the decision came into effect on 1 June 2023. |
No fines were set in the decision; the consequence of failing a condition was loss of Qualifying Free Zone Person status from the start of the Tax Period and for the following four Tax Periods, with the company taxed at 9% on its Taxable Income.
Free zone clients' 2023 and 2024 qualifying-activity analyses were done under this decision, and we keep it indexed for those returns. Because the 2025 replacement applies retroactively from the same 1 June 2023 date, the current position for every period is Ministerial Decision No. 229 of 2025, and where the two differ the later text is more generous: wider commodities, treasury for own account, distribution to public benefit entities. We therefore revisit any 2023 or 2024 analysis in which a client was treated as outside the regime on a point the 2025 decision relaxed, in particular commodity traders whose products were not exchange-traded in raw form. The core lists of Qualifying and Excluded Activities, the de minimis test and the five-period loss of status are unchanged, so advice given on those points under this decision still stands.
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