Ministerial Decision No. 229 of 2025

On 3 September 2025, the UAE Ministry of Finance issued Ministerial Decision No. 229 of 2025, updating the list of Qualifying Activities and Excluded Activities in relation to Qualifying Free Zone Person (‘QFZP’) provisions under the UAE Corporate Tax Law. This Decision repeals the earlier Decision No. 265 of 2023 and applies retrospectively from the inception of the UAE Corporate Tax law, i.e., 1 June 2023.

Key Highlights:

Qualifying Activities are clearly defined for entities seeking to benefit from the UAE's corporate tax incentives under the Free Zone regime. Some of the modifications include:

• Trading of qualifying commodities expanded to include (further elaborated below):

• Industrial chemicals.
• Associated by-products.
• Environmental commodities like carbon credits.

• Scope of Treasury and financing activities conducted for related parties now expanded to also include such activities conducted for own account.
• Distribution activity conducted in or from a designated free zone earlier required that the goods could be sold only to resellers. Now this is expanded to also include goods sold to Public Benefit Entities.

Important Changes in Commodity Trading:

Removal of Raw Form - The definition of qualifying commodities has been expanded by removing the term “Raw form”.

• Expansion of definition of Qualifying Commodities - The qualifying commodities now to also include industrial chemicals, associated by products and environmental commodities like carbon credits, etc, provided a Quoted Price for such commodities exists.
• Expansion of scope of the activity - The scope of the activity is broadened to include associated financial derivates trading used to hedge risks involved in such activities and associated structured commodity financing activity, provided the activity is not conducted by a QFZP whose revenue from distribution, warehousing, logistics or inventory management constitutes 51% or more of total revenue during the tax period.
• Quoted Price – Quoted Price is a price of a qualifying commodity or a related commodity specified by a recognized commodity exchange market or by a Recognized Price Reporting Agency.
• Recognized Price Reporting Agency – Agencies specified vide Ministerial Decision 230 of 2025 as under:-

1. S&P Global Commodity Insights (Platts & Fertecon)
2. Argus Media
3. ICIS (Independent Commodity Intelligence Services)
4. OPIS (Oil Price Information Service)
5. RIM Intelligence
6. CRU Group
7. Quantum Commodity Intelligence
8. Fastmarkets
9. General Index
10. ICE (Intercontinental Exchange)
11. MONTEL
12. Spark Commodities
13. Expana

Why This Matters

The UAE businesses in Free Zones need to immediately revisit their position and eligibility to avail QFZP benefits in light of the new decision issued with less than a month remaining to file the first tax return for the tax period 2024. Further, in case the Tax Returns have already been filed, impact of the decision should be considered (as the same is retrospectively applicable from 1 June 2023) and accordingly corrective measures should be taken, if required.

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