In most jurisdictions of the world, there are tax incentives; however, there is usually not enough guidance available. But in the UAE, the case is different, as evident in the recent tax clarifications for free zone entities. Specifically, the Ministerial Decisions no. 229 and 230 provide clear guidance on qualifying activities, excluded activities, recognized price reporting agencies, and other relevant information. This, in turn, is important for free zone entities to achieve the status of a qualified free zone person and claim the 0% preferential corporate tax rate. In this blog, we discuss the role of recognized price reporting agencies and related guidance.
Key Tax Clarifications for Free Zones
The decision number. 229 primarily pertains to qualifying activities, excluded activities, and related guidance. According to tax law, free zones may be subject to a preferential corporate tax rate of 0% on their qualifying income, provided they meet specific conditions (a qualifying free zone person). The 0% rate only applies to qualifying activities as defined by the legal framework. This update provides specific details on qualifying activities, including those that were not previously designated as qualifying activities in the previous regulations. Initially, free zones could only benefit from a preferential rate if the commodity trading involved goods in raw form. However, a wider range of products is now available.
The next update (230) is supplemental to the Ministerial Decision No. 229. It specifies the recognized price reporting agencies that firms can use to attain a quoted price when dealing with qualifying commodities. Both updates provide new tax clarification for free zone entities to enjoy a preferential corporate tax rate.
What is meant by a Recognized Price Reporting Agency?
The tax law defines it as, “Any commodities exchange market established in the State that is licensed and regulated by the relevant competent authority, or any commodities exchange market established and recognized outside the State that are licensed and regulated by the relevant foreign authority in the jurisdiction of establishment, or any commodities exchange market as specified in a decision issued by the Minister.”
List of PRAs as per Ministerial Decision No. 230
The following 13 agencies are currently recognized price reporting agencies as per the Decision no. 230.
- S&P Global Commodity Insights (Platts & Fertecon)
- Argus Media
- ICIS (Independent Commodity Intelligence Services)
- OPIS (Oil Price Information Service)
- RIM Intelligence
- CRU Group
- Quantum Commodity Intelligence
- Fastmarkets
- General Index
- ICE (Intercontinental Exchange)
- MONTEL
- Spark Commodities
- Expana
Impact of Recent Clarifications on Free Zone Entities
Following the recent explanations, businesses need to understand the impact on their activities and other factors. Notably, the ones operating in the free zones.
Clarity
Before the Ministerial Decision No. 230, there was ambiguity in using the sources to define the quoted prices of commodities. However, it is now clear where to get the quoted prices. This, in turn, makes things easy, clear, and certain for businesses in the designated zones of the UAE. Consequently, it will lead to overall tax compliance.
Tax Incentives and Transparency
Generally, both updates provide enough guidance to claim the 0% preferential corporate tax rate and enjoy the status of a qualified free zone person. For instance, Decision 229 provides details on qualifying and excluded activities. Furthermore, it also requires that the commodities must have a quoted price from a reliable source, i.e., from a recognized price reporting agency. The specific details of these sources are given under Decision 230. If your quoted price is from an unrecognized source, you risk the relevant revenue being excluded. The UAE shows its commitment to providing tax incentives by sharing information in a transparent, reliable, clear, and understandable form. Thus, to claim a 0% rate, the information provided is clear, transparent, and available for entities.
Retrospective Application of Updates
One of the important points here is that these updates are applicable from 1st June, 2023, i.e., retrospectively. Therefore, there might be a need for some entities to refer back to tax returns and related documentation to analyze the impact of unrecognized sources of prices.
Conclusion
The recent tax clarifications for UAE free zones discuss the role of recognized price reporting agencies (PRAs). Specifically, the Ministerial Decision No. 230 of 2025 highlights the role of such agencies. It is primarily for free zone entities seeking to benefit from a preferential 0% corporate tax rate. This decision is supplemental to Ministerial Decision No. 229 of 2025. These updates provide clarity to the entities looking to achieve the status of a qualified free zone entity and thus achieve 0% taxation. This, in turn, underscores the UAE’s commitment to establishing the region as a transparent business hub.
Creative Zone Tax & Accounting (CZTA)
The new tax clarifications for UAE free zone entities are applicable retrospectively, from 1st June 2023. Therefore, relevant entities need to access their compliance status. However, it might not be easily achievable. Our team works strenuously to keep our clients regularly compliant with the tax laws. Contact us today for an assessment.
