The first update, Ministerial Decision No. (229) of 2025, replaces an earlier ruling from 2023 and sets out clearer guidance on which activities within Free Zones qualify for preferential corporate tax treatment

At the heart of the update is an expanded definition of 'Qualifying Commodity Trading'. Until now, Free Zone firms could only benefit from the special zero per cent corporate tax rate on commodity trading if the goods were in raw form. The new decision removes that limitation, allowing a much wider range of products to be included.

Qualifying commodities now cover metals, minerals, energy and agricultural goods, industrial chemicals, and even associated by-products. Importantly, the list also includes “environmental commodities”, such as carbon credits—underscoring the UAE’s focus on sustainability and green finance.

For these items to qualify, a Quoted Price must be available. This means the commodity must have a transparent, verifiable price published by either a recognised commodity exchange or one of the approved Price Reporting Agencies listed under Ministerial Decision No. (230). By linking tax benefits to transparent market pricing, the government is helping ensure fairness and preventing abuse of the regime.

The new decision also brings clarity to treasury and financing services. Free Zone companies can now carry out activities such as self-investment and financing of related parties under the qualifying category. This update provides flexibility for holding companies and groups managing their finances centrally, an increasingly common practice among multinational firms operating in the UAE.

Distribution has also been addressed. Companies based in designated Free Zones that distribute goods or materials can do so to public benefit entities without breaching the so-called de-minimis threshold. This ensures that socially valuable transactions do not inadvertently disqualify a business from the preferential Free Zone regime.

The companion Ministerial Decision No. (230) of 2025 establishes the list of recognised Price Reporting Agencies. These agencies are widely used in global commodity markets to provide reliable benchmark prices for metals, energy, and agricultural products. By officially naming them, the Ministry of Finance has given businesses and tax advisers the certainty they need to comply with the rules.

This step also strengthens the UAE’s alignment with global best practices. Many international tax regimes require the use of transparent, third-party pricing sources for commodities, and the UAE’s move ensures that Free Zone companies can operate with confidence in cross-border transactions.

The decisions come at a critical time. Since the corporate tax law came into effect on June 1, 2023, one of the most discussed topics has been how Free Zone entities—key players in the UAE’s economic model—would be treated.

UAE’s free zones host thousands of international companies and are vital to the country’s diversification strategy, particularly in logistics, energy trading, manufacturing, and financial services. Under the corporate tax framework, Free Zone businesses may qualify for a zero per cent tax rate on certain income if they meet strict conditions. However, income from “excluded activities” or non-qualifying transactions may still be taxed at the standard nine per cent rate