Every IFZA company must register for UAE Corporate Tax and file a return each year, even with zero revenue. The return for a 31 December 2025 year end is due by 30 September 2026. IFZA consultancies billing mainland clients, individuals or overseas clients for non-qualifying services usually pay 9% above AED 375,000 or elect Small Business Relief, because 0% needs full Qualifying Free Zone Person status, including audited financial statements.
- Your company holds an IFZA licence, whether it trades or sits dormant
- You run a consultancy, trading or holding company from IFZA and bill clients in the UAE or abroad
- Your taxable supplies are approaching AED 375,000 in a 12 month period
- You want the 0% free zone rate or are choosing between it and Small Business Relief
Not sure where you stand? Get a free 15-minute review or ask us on WhatsApp.
Does an IFZA company have to register for Corporate Tax and VAT?
Yes for Corporate Tax, always, and for VAT only once taxable supplies and imports pass AED 375,000 in 12 months. An IFZA licence makes your company a UAE resident taxable person, so it registers on EmaraTax and files every year whatever its revenue or profit.
| Your IFZA situation | Corporate Tax | VAT |
|---|---|---|
| New or dormant company, no invoices yet | Register and file, even at zero | No registration needed yet |
| Consultancy with taxable supplies over AED 375,000 in 12 months | Register and file | Mandatory registration, VAT 201 each quarter |
| Taxable supplies or expenses between AED 187,500 and AED 375,000 | Register and file | Voluntary registration allowed |
| Revenue up to AED 3,000,000, not claiming 0% as a free zone person | Can elect Small Business Relief for periods ending on or before 31 December 2029 | Normal thresholds |
| Claiming 0% as a Qualifying Free Zone Person | All QFZP conditions, including audited statements; no Small Business Relief | Normal thresholds |
Two IFZA edge cases catch owners out. An IFZA holding company whose only income is dividends still registers and files. And if you personally invoice clients outside the company, that income is tested under the AED 1,000,000 natural person rule in our guide to Corporate Tax for individuals.
Can an IFZA consultancy or holding company get the 0% free zone rate?
Only if it meets every Qualifying Free Zone Person (QFZP) condition, and most IFZA consultancies do not, because their income is not Qualifying Income. The 0% rate is earned each tax period; it does not come with the IFZA licence. Our guide to QFZP status covers the legal detail.
The conditions an IFZA company must meet together
- Adequate substance in the UAE: people, spend and the core work are here, not only a flexi desk.
- Qualifying Income as defined in Cabinet Decision No. 100 of 2023.
- De minimis: non-qualifying revenue within the lower of AED 5,000,000 or 5% of revenue.
- Transfer pricing compliance, with the disclosure form filed alongside the return.
- Audited financial statements and no election for the standard rate.
Who your IFZA company bills decides most of the answer
Billing clients abroad does not by itself make income qualifying. Income from mainland customers and individuals is generally non-qualifying, and general consultancy, marketing or software work for a foreign company is generally not a Qualifying Activity either.
| IFZA revenue stream | Usual QFZP treatment |
|---|---|
| Advisory for a mainland Dubai LLC | Generally non-qualifying |
| Coaching or relocation help for individuals | Generally non-qualifying |
| Consulting retainer for a UK or US company | Generally non-qualifying unless the activity is on the Qualifying Activities list |
| Services to a company in another free zone | Can qualify if not an excluded activity; confirm who really benefits |
| Holding shares in subsidiaries | Holding shares is a Qualifying Activity |
| Headquarter or treasury services to related parties | Qualifying Activities, supported by transfer pricing |
What failing the test costs
Fail one condition and the company pays 0% on the first AED 375,000 of taxable income and 9% above it, and loses QFZP status for that period and the next 4. IFZA holding structures should also read Corporate Tax for holding companies, because dividends can fall under the participation exemption instead.
Should an IFZA company choose Small Business Relief or QFZP, and does it need an audit?
An IFZA company with revenue up to AED 3,000,000 that is not a QFZP can elect Small Business Relief, and for a service business that fails the Qualifying Income test it is usually the simpler route. You cannot have both.
The three routes side by side
| Route | Tax result | Audited statements for CT? | Best fit in IFZA |
|---|---|---|---|
| Qualifying Free Zone Person | 0% on Qualifying Income | Yes, every period | Holding, group HQ or treasury entities |
| Small Business Relief | Treated as having no taxable income | No | Consultancies and online service firms up to AED 3,000,000 revenue |
| Standard rates | 0% up to AED 375,000, 9% above | Only above AED 50,000,000 revenue | Larger IFZA companies that do not qualify |
The FTA audit rule and IFZA's own rule are separate
For Corporate Tax, Ministerial Decision No. 84 of 2025 requires audited financial statements from every Qualifying Free Zone Person and from companies with revenue above AED 50,000,000, for tax periods starting on or after 1 January 2025. A small IFZA consultancy on Small Business Relief is not caught by it.
IFZA’s licence renewal requirement is separate and must be confirmed with IFZA for your licence. We compare zone rules in free zone audit requirements by zone, and our UAE free zone audit explainer covers what auditors ask for.
How does VAT work for IFZA companies, and does licence renewal cover the FTA?
VAT for an IFZA company works as it does on the mainland: register at AED 375,000, charge 5% on standard rated services and file a VAT 201 by the 28th of the month after each period. A free zone address changes nothing for services.
Designated zones only matter for goods
Certain goods movements inside a designated zone can be outside VAT, but services are always 5%. IFZA does not appear on the partial designated zone list in our verified references, so an IFZA trading company must check its premises against the FTA’s current list before treating a goods sale as outside scope; see our designated zones VAT guide. For consultancies, the live question is zero rating overseas invoices, covered in zero-rated VAT for exported services.
Your IFZA renewal and your FTA account run on different clocks
Paying IFZA’s renewal invoice files nothing with the FTA. If your renewal documents show a different financial year from your EmaraTax record, fix the FTA record first, because the FTA deadline follows its own record.
| Obligation | Who you deal with | When |
|---|---|---|
| Licence renewal and visa quota | IFZA | Licence anniversary |
| Corporate Tax return | FTA via EmaraTax | 9 months after financial year end |
| VAT 201 returns | FTA via EmaraTax | 28th of the month after each period |
| Deregistration on closure | FTA via EmaraTax | After the final returns |
How to file an IFZA company's Corporate Tax return on EmaraTax
Filing takes seven steps, and the first three decide your tax rate before you open the form.
Confirm the tax period on EmaraTax
Check the financial year on your registration matches your IFZA documents and accounts. Raise any amendment early and keep the reference.
Split revenue by customer type
Tag every invoice as mainland company, individual, foreign company, other free zone person or related party. The Qualifying Income and de minimis tests run on this schedule.
Choose QFZP, Small Business Relief or standard rates
If non-qualifying revenue exceeds the lower of AED 5,000,000 or 5% of revenue, QFZP is out. At AED 3,000,000 revenue or less, compare the Small Business Relief election.
Close the books, and audit if claiming QFZP
Prepare the year’s financial statements. Book the auditor’s fieldwork well before the filing deadline if you will claim 0%.
Adjust accounting profit to taxable income
Add back non-deductible items and test salaries, management fees and shareholder loans for arm’s length pricing.
Complete the transfer pricing disclosure
Payments to owners, directors and group companies go on the form filed with the return. Our transfer pricing guide explains the support you need.
Submit and pay by the same deadline
File on EmaraTax and pay within 9 months of year end. Keep the acknowledgement with your accounts for 7 years.
Documents an IFZA company needs before filing
Gather these first, because missing items are what push IFZA returns past the deadline.
- IFZA licence, memorandum and share register
- Corporate Tax registration certificate, plus the VAT certificate if registered
- Statements for every bank, multi-currency and payment platform account
- Sales invoices tagged by customer type and location
- Retainer contracts with overseas clients and group service agreements
- Payroll records and the owner’s salary or dividend decisions
- Shareholder and related company loan agreements
- Audited statements if claiming QFZP; signed management accounts otherwise
IFZA Corporate Tax and VAT deadlines for 2026 and 2027
The date that matters most right now is 30 September 2026, the return and payment deadline for IFZA companies with a 31 December 2025 year end.
| Date | What is due | Who it applies to |
|---|---|---|
| 30 September 2026 | Corporate Tax return and payment | 31 December 2025 year ends |
| 28 October 2026 | VAT 201 for July to September 2026 | VAT registered companies on calendar quarters |
| 31 March 2027 | Corporate Tax return and payment | 30 June 2026 year ends |
| 31 March 2027 | Appoint an e-invoicing Accredited Service Provider | Revenue under AED 50,000,000 |
| 7 months after first tax period ends | First return filed to waive the late registration penalty | Companies that registered late |
| 31 December 2029 | Last period end for Small Business Relief | Revenue up to AED 3,000,000 |
What penalties can an IFZA company face from the FTA in 2026?
An IFZA company faces exactly the penalties a mainland company does: AED 10,000 for late Corporate Tax registration, AED 500 a month for a late return and 14% a year on unpaid tax. VAT penalties follow Cabinet Decision 129/2025; Corporate Tax penalties follow Cabinet Decision 75/2023 as amended.
| Violation | Penalty | Law |
|---|---|---|
| Late Corporate Tax registration | AED 10,000, waived if the first return is filed within 7 months of the first tax period end | CD 75/2023 as amended |
| Late Corporate Tax return | AED 500 a month for 12 months, then AED 1,000 a month | CD 75/2023 as amended |
| Late Corporate Tax payment | 14% a year, calculated monthly | CD 75/2023 as amended |
| Late Corporate Tax deregistration | AED 1,000 a month, up to AED 10,000 | CD 75/2023 as amended |
| Failed QFZP condition | Standard rates for that period and the next 4 | Corporate Tax law |
| Late VAT registration | AED 10,000 plus backdated output VAT | CD 129/2025 |
| Late VAT return | AED 1,000 first, AED 2,000 repeat within 24 months | CD 129/2025 |
| Late VAT payment | 14% a year, calculated monthly | CD 129/2025 |
How it stacks: an IFZA consultancy owing AED 34,650 that files and pays 3 months late pays 3 x AED 500 = AED 1,500 for filing plus AED 34,650 x 14% x 3/12 = AED 1,212.75 for payment, so AED 2,712.75 on top of the tax. See our Corporate Tax penalties guide for more.
Worried your IFZA company is already accruing penalties?
We check your EmaraTax registration, tax period and missed returns and show you what is owed today and how to stop it growing.
6 mistakes IFZA company owners make with Corporate Tax and VAT
Most IFZA penalties we review trace back to one of these assumptions.
- Treating the licence as a tax exemption. Skipping registration costs AED 10,000, and each missed return adds AED 500 a month.
- Assuming foreign clients mean 0%. Consulting for a US client is generally non-qualifying, so a QFZP claim fails for 5 periods.
- Claiming QFZP without an audit. Audited statements are a condition; the claim fails on that alone.
- Ticking both QFZP and Small Business Relief. A QFZP cannot use the relief, so the return is wrong from the start.
- Paying the owner an unsupported salary. Connected person payments must be arm’s length and disclosed, or the excess can be added back.
- Cancelling the licence with FTA registrations left open. Late deregistration builds at AED 1,000 a month up to AED 10,000.
A monthly, quarterly and annual routine that keeps an IFZA company penalty free
A fixed routine prevents almost every penalty in the table above.
- Monthly: reconcile every account and tag each invoice by customer type
- Monthly: track rolling 12 month taxable supplies against AED 187,500 and AED 375,000
- Quarterly: file the VAT 201 by the 28th, nil returns included
- Quarterly: compare non-qualifying revenue with the lower of AED 5,000,000 or 5%
- Annually: decide QFZP, Small Business Relief or standard rates before year end
- Annually: book the auditor early if claiming QFZP
- On closure: file final returns and deregister before the licence lapses
If that routine is not realistic in house, accounting and bookkeeping from AED 599 a month covers it.
Your IFZA company missed a deadline or received an FTA penalty: what now?
File the overdue return first, because the monthly late filing penalty only stops when the return is in; our missed Corporate Tax deadline guide covers the first seven days. Then settle the QFZP or standard rate position on the real facts, and correct any earlier 0% claim through a voluntary disclosure.
If you disagree with a penalty, request reconsideration within 40 business days of the decision, with evidence such as your tax period amendment request. Our FTA reconsideration guide walks through it; if the FTA refuses, the next stage is the Tax Disputes Resolution Committee. Winding up? Follow the Corporate Tax deregistration steps so penalties stop with the licence.
Got an FTA notice for your IFZA company?
Send us the notice and we will tell you whether to file, disclose or request reconsideration first.
Worked example: an IFZA consultancy with mainland clients
Take an illustrative IFZA management consultancy with AED 1,800,000 of revenue for 2025: AED 1,200,000 from mainland Dubai companies and AED 600,000 from UK clients.
| Line | AED | Note |
|---|---|---|
| Total revenue | 1,800,000 | Year ended 31 December 2025 |
| Mainland client revenue | 1,200,000 | Generally non-qualifying |
| De minimis limit | 90,000 | Lower of AED 5,000,000 or 5% x 1,800,000 |
| QFZP result | Fails | Mainland revenue alone exceeds the limit |
| Deductible expenses | 1,040,000 | Staff, office, software, travel |
| Taxable income | 760,000 | 1,800,000 minus 1,040,000 |
| Taxed at 9% | 385,000 | 760,000 minus the 375,000 band |
| Corporate Tax at standard rates | 34,650 | 9% x 385,000 |
| Corporate Tax with Small Business Relief | 0 | Revenue under AED 3,000,000, not a QFZP |
The company cannot claim 0%, but it can elect Small Business Relief and still file by 30 September 2026. With taxable supplies above AED 375,000 it must also be VAT registered and charge 5% on mainland invoices. Try your own figures in the Corporate Tax estimator.
Should you file IFZA Corporate Tax yourself, use a freelancer or hire a firm?
A dormant IFZA company with one bank account can reasonably file its own return; a company testing QFZP or mixing mainland and overseas clients benefits from a qualified accountant.
| Option | Cost | Risk | Who it suits |
|---|---|---|---|
| Do it yourself | No fee, your time | Wrong QFZP or relief choice, missed disclosure form | Dormant or single client companies |
| Freelance accountant | Typical market range: below a firm, varies widely | Depends on one person | Simple consultancies under the VAT threshold |
| Accounting firm such as Paci | Fixed quote within 24 hours, no hourly billing | Lower: reviewed, documented position | VAT registered, mainland clients or group charges |
Market pricing is covered in how much Corporate Tax filing costs. To have your IFZA return prepared and reviewed, see our Corporate Tax filing service.
What IFZA company owners actually ask us
My IFZA renewal papers show a December financial year, but my Corporate Tax certificate shows a first tax period ending 30 June 2026, and the correction has been pending for months. Which deadline do I follow?
Work to the tax period on your FTA record until the FTA confirms the change, because that is what its systems expect. For a 30 June 2026 period end, the return is due 9 months later, by 31 March 2027. Keep the amendment reference, and if the FTA formally rejects it, request reconsideration within 40 business days.
My IFZA company invoices one US client and pays nearly all of it to me as salary. Do I still have to file?
Yes, the company files whatever its profit. Your salary is outside Corporate Tax for you personally, but for the company it is a connected person payment: it must be at arm’s length and go on the transfer pricing disclosure form, or the FTA can add back the excess.
My IFZA company only bills clients in the US and UK. Will I still pay 9%?
Possibly. 0% needs adequate substance, audited financial statements, non-qualifying revenue within the lower of AED 5,000,000 or 5% of revenue, and transfer pricing compliance, and foreign clients do not make consulting income qualifying. Fail a condition and standard rates apply for that period and the next 4, so Small Business Relief is often the practical choice.
How do I apply for a VAT and Corporate Tax exemption for my IFZA company, and do I really need an audit?
There is no exemption to apply for. The company registers and files, and claims 0% in the return only if every QFZP condition is met, including audited statements. VAT registration is mandatory once taxable supplies and imports pass AED 375,000 in 12 months. Not claiming QFZP and under AED 50,000,000 revenue? The Corporate Tax audit rule does not apply, but confirm IFZA’s renewal rule.
My IFZA company turns over about AED 375,000 and accounting quotes vary enormously. How do I cut the cost?
Check whether VAT registration is actually mandatory: below AED 375,000 of taxable supplies it is voluntary. Keep monthly books so quarterly returns, due by the 28th, are quick. Ask for a fixed quote rather than hourly billing; Paci quotes within 24 hours and bookkeeping starts from AED 599 a month.
I have just set up a one person IFZA software company and want to keep my own books. What do I register for now?
Corporate Tax now, whatever your revenue, and VAT once taxable supplies pass AED 375,000 in 12 months. Your own books are fine if complete, kept for 7 years for Corporate Tax. Software work for third parties is generally not a Qualifying Activity, so plan for Small Business Relief or standard rates.
Frequently asked questions
Is an IFZA company tax free in the UAE?+
No. An IFZA company must register for Corporate Tax and file every year. It pays 0% only on Qualifying Income if it meets every Qualifying Free Zone Person condition; otherwise 0% up to AED 375,000 of taxable income and 9% above, unless it elects Small Business Relief.
When is the IFZA corporate tax return due?+
Nine months after your financial year end, together with any payment. For a 31 December 2025 year end that is 30 September 2026. A late return costs AED 500 a month for the first 12 months, then AED 1,000 a month.
Does an IFZA company need VAT registration?+
Only once taxable supplies and imports exceed AED 375,000 in the previous 12 months or are expected to within 30 days; voluntary from AED 187,500. Once registered, file a VAT 201 by the 28th after each period, or use a VAT return filing service.
Is an audit mandatory for an IFZA company?+
For Corporate Tax, audited statements are required if the company claims Qualifying Free Zone Person status or has revenue above AED 50,000,000, under Ministerial Decision No. 84 of 2025. IFZA’s renewal requirement is separate; confirm it with IFZA.
Can an IFZA company claim Small Business Relief?+
Yes, if revenue is AED 3,000,000 or less in the current and all prior tax periods and it is not a Qualifying Free Zone Person. The relief covers tax periods ending on or before 31 December 2029, and the return must still be filed.
What happens to IFZA Corporate Tax registration when the licence is cancelled?+
Nothing closes automatically. File final returns, then deregister for Corporate Tax and VAT. Late Corporate Tax deregistration costs AED 1,000 a month up to AED 10,000, and Corporate Tax records must be kept for 7 years after closure.
Can an IFZA company work with mainland UAE clients?+
Commercial permission depends on your licence activities, which IFZA confirms. For tax, mainland income is generally non-qualifying and counts toward the de minimis limit. Our mainland vs free zone compliance guide compares the obligations.
Get your IFZA company's 0% or 9% position checked for free
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- FTA: Registration for VAT
- FTA: Waiver of penalties
- Ministry of Finance: Decision on Small Business Relief for Corporate Tax
- FTA: Small Business Relief Corporate Tax Guide (CTGSBR1)
- IFZA: International Free Zone Authority
Checked against these sources on 15 September 2026. This guide is general information for UAE businesses, not advice on your specific facts.