Introduction
The UAE Federal Tax Authority (FTA) has introduced Decision No. 6 of 2026, establishing additional compliance procedures for certain Qualifying Free Zone Persons (QFZPs). The decision is specifically aimed at businesses engaged in the distribution of goods or materials in or from a Designated Zone and introduces new documentation and audit requirements to support their Corporate Tax compliance.
The new rules apply to Tax Periods commencing on or after 1 January 2026 and are designed to ensure that businesses claiming the relevant Corporate Tax treatment can demonstrate that they satisfy the prescribed conditions.
If your company operates from a UAE Free Zone and distributes goods, understanding these new requirements is essential to avoid compliance issues and ensure timely reporting.
Key Facts at a Glance
Who Is Affected?
The decision applies only to Qualifying Free Zone Persons carrying out the qualifying activity of distribution of goods or materials in or from a Designated Zone.
Businesses providing professional services, consulting, software development, marketing, or similar activities are not covered by this specific decision unless they also undertake the qualifying distribution activity described in the decision.
What Is the New Compliance Requirement?
The most significant change introduced by the FTA is the requirement to obtain an Agreed-Upon Procedures (AUP) Report from an independent external auditor. The report must be prepared in accordance with International Standard on Related Services (ISRS) 4400 by the company's independent external auditor or another auditor licensed in the UAE.
Unlike a standard financial statement audit, the AUP report focuses on specific procedures prescribed by the FTA and records the factual findings from those procedures.
What Must the Auditor Verify?
The auditor's procedures are intended to demonstrate two key compliance requirements:
1. Customers Are Genuine Resellers
The report must provide evidence that the business supplies goods or materials to customers who:
Resell the goods;
Process or alter the goods for sale or resale; or
Acquire the goods for qualifying onward supply activities.
2. Goods Entered Through a Designated Zone
Where goods are imported into the UAE, the auditor must verify that the importation occurred through a Designated Zone, supported by appropriate customs and shipping documentation.
Documents Businesses Should Maintain
To support the auditor's review, businesses are expected to collect and retain adequate documentation.
For reseller verification, examples include:
Customer trade or commercial licences
Signed customer declarations or confirmations
Sales agreements
Purchase orders
Sales invoices
Other transactional records demonstrating resale activity.
For imported goods, businesses should maintain:
Import declarations
Customs clearance documents
Bills of lading
Airway bills
Shipping records showing entry through a Designated Zone.
Maintaining organised documentation throughout the year will make the compliance process significantly easier.
Submission Deadline and Compliance Risk
The required AUP report must be submitted to the FTA within 30 days after the deadline for filing the Corporate Tax return, unless another date is specified by the Authority.
The decision also states that if the report is not submitted, the conditions relating to this qualifying activity will not be considered satisfied for the purposes of the relevant ministerial decisions.
Businesses should therefore incorporate this reporting requirement into their annual Corporate Tax compliance calendar.
Practical Steps for Free Zone Businesses
If your company is affected by this decision, consider taking the following actions:
Confirm whether your business qualifies as a QFZP engaged in the distribution of goods or materials.
Maintain complete customer and transaction records throughout the tax period.
Retain customs and shipping documentation for imported goods.
Coordinate with your independent auditor well before the Corporate Tax filing deadline.
Review your documentation processes to ensure all required evidence is available when preparing the AUP report.
Early preparation can help reduce compliance risks and avoid last-minute delays.
Conclusion
FTA Decision No. 6 of 2026 introduces important additional compliance requirements for Qualifying Free Zone Persons engaged in the distribution of goods or materials in or from a Designated Zone. The new Agreed-Upon Procedures Report, enhanced documentation expectations, and submission deadline reinforce the importance of maintaining accurate records and planning ahead for Corporate Tax compliance.
Businesses that fall within the scope of this decision should assess their current processes, ensure the necessary documentation is maintained, and engage with their auditors early. Taking a proactive approach will help support compliance with the FTA's requirements and streamline the annual Corporate Tax reporting process.
Frequently Asked Questions (FAQ)
1. Who does FTA Decision No. 6 of 2026 apply to?
It applies to Qualifying Free Zone Persons (QFZPs) engaged in the qualifying activity of distributing goods or materials in or from a Designated Zone.
2. What is an Agreed-Upon Procedures (AUP) Report?
It is a report prepared by an independent external auditor under ISRS 4400, documenting specific procedures and factual findings required by the FTA.
3. When does this decision take effect?
The decision applies to Tax Periods beginning on or after 1 January 2026.
4. When must the AUP report be submitted?
It must be submitted within 30 days after the Corporate Tax return filing deadline, unless the FTA determines another submission date.
5. What happens if the report is not submitted?
According to the decision, the relevant conditions for the qualifying distribution activity will not be considered to have been met.
How Essence UAE Can Help
Keeping up with changing Corporate Tax regulations can be challenging for Free Zone businesses. At Essence UAE, our experienced tax professionals help businesses understand new FTA requirements, review compliance processes, maintain proper documentation, coordinate with auditors, and meet Corporate Tax reporting obligations.
Whether you require assistance with Corporate Tax compliance, bookkeeping, financial reporting, or tax advisory services, our team is here to help your business stay compliant with the latest UAE tax regulations.
Essence UAE | Your Trusted Tax & Accounting Partner in Dubai
Website: http://www.essenceuae.com
References
This article is based on:
Federal Tax Authority Decision No. 6 of 2026 – Determining the Additional Procedures for the Compliance of Qualifying Free Zone Persons Engaged in the Activity of Distribution of Goods or Materials in or from a Designated Zone.
Federal Tax Authority Decision No. 6 of 2026 – Articles 2, 3, 5 and 6.
Disclaimer
This article is intended for general informational purposes only and is based on the provisions of Federal Tax Authority Decision No. 6 of 2026. Businesses should assess whether the decision applies to their specific circumstances and seek professional advice where necessary. Applicants should also refer to the latest official guidance issued by the Federal Tax Authority.
