FTA Decision No. 6 of 2026: The ISRS 4400 Report for a Qualifying Free Zone Person Distributing through a UAE Designated Zone — Who Is Obliged, What the Auditor Checks, Sampling, Deadlines and Consequences

The agreed-upon procedures (AUP) report under FTA Decision No. 6 of 2026 is a document that a Qualifying Free Zone Person (QFZP) engaged in the Qualifying Activity of distributing goods or materials in or from a Designated Zone must obtain from an independent external auditor licensed in the UAE. The report must be submitted to the Federal Tax Authority (FTA) no later than 30 days after the deadline for filing the company’s Corporate Tax return. The obligation was introduced by Federal Tax Authority Decision No. 6 of 2026 on 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 for the Purposes of the Taxation of Corporations and Businesses, issued on 2 June 2026, published on the FTA website on 14 July 2026 and applicable to Tax Periods commencing on or after 1 January 2026. The report is prepared under International Standard on Related Services 4400 (Revised), Agreed-Upon Procedures Engagements (ISRS 4400) and must factually demonstrate the two conditions of the Qualifying Activity in paragraph (l) of Clause 1 of Article 2 of Ministerial Decision No. 229 of 2025: customers resell or process the goods for sale, and goods entering the UAE are imported through a Designated Zone. The auditor performs six procedures on a sample whose size is set by a formula with a 10% margin of error. If the report is not submitted, the distribution conditions are deemed not met — the income from distribution becomes non-qualifying, and a breach of the de minimisthreshold (5% of Revenue or AED 5,000,000, whichever is lower) strips the company of QFZP status for five Tax Periods, with Taxable Income taxed at the standard rate of 9% above AED 375,000.

Key facts. First: FTA Decision No. 6 of 2026 was issued on 2 June 2026, took effect on its date of issuance (Article 6) and applies to Tax Periods commencing on or after 1 January 2026 (Article 5); for a company with a calendar financial year the first report will cover 2026 and will be due no later than 30 October 2027. Second:the report is mandatory only for QFZPs engaged in the Qualifying Activity in paragraph (l) — distribution of goods or materials in or from a Designated Zone; companies in Free Zones that are not on the VAT list of Designated Zones, and logistics operators that do not take title to the goods, are outside the Decision. Third:the report may be issued by the external auditor that carries out the annual audit of the company’s financial statements or by any other independent auditor “licensed in the State” (Clause 1 of Article 2 of the Decision); the licensing of auditors is governed by Federal Decree-Law No. 41 of 2023 on Regulating the Auditing and Accounting Professions, which the Decision itself does not cite. Fourth: the Sample Size is calculated as “Sample Population ÷ (1 + Sample Population × 0.01)”: with 10 customers the formula gives 9.1 (in effect a full check), with 100 it gives 50, with 1,000 it gives 90.9; the Decision sets no rounding rule, and the highest-value items must always be included in the sample (Article 3). Fifth: as at 10 September 2026 the FTA’s Corporate Tax legislation index contains no instrument amending Ministerial Decisions No. 84 and No. 229 of 2025 and no new Cabinet Decision on Designated Zones; the current VAT list of Designated Zones comprises 24 effective zones out of 27 entries on the FTA list based on Cabinet Decision No. 59 of 2017 as amended.

What FTA Decision No. 6 of 2026 Requires: A Map of the Designated Zone Distributor’s Obligations

The requirements of FTA Decision No. 6 of 2026 form a system of five interlocking obligations of a QFZP distributor: collect the documents during the Tax Period, engage an auditor, have the six procedures performed on a sample, obtain the report under ISRS 4400 and submit it to the FTA on time. The table below maps the obligations, provisions, parameters and consequences; each row is developed in the sections that follow.

Author’s assessment: Decision No. 6 of 2026 turns the 0% regime for distributors from declaratory into evidentiary. Until 2026 the conditions of paragraph (l) — the customer’s status and the route of the goods through a Designated Zone — were tested only in a tax audit, and a company could rely on its own interpretation for years. Now an independent auditor records factual compliance with those conditions each year, and a sample with a 10% margin of error becomes a full check when the number of customers is small. For a distributor this means that evidence of resale and importation must be collected at the moment of the transaction, not when the return is being prepared; the general conditions of the regime from which this requirement grew are examined in Qualifying Free Zone Person Regime in 2026: Conditions for Applying the Zero Corporate Tax Rate in the United Arab Emirates.

Which Instruments Form the Legal Basis of the Requirement: From Federal Decree-Law No. 47 of 2022 to FTA Decision No. 6 of 2026

The legal basis of the agreed-upon procedures report is a four-tier chain of UAE federal instruments in which each successive tier adds detail to the one above it: Federal Decree-Law No. 47 of 2022 establishes the QFZP regime, Cabinet Decision No. 100 of 2023 defines Qualifying Income and the concept of a Designated Zone for Corporate Tax purposes, Ministerial Decisions No. 229 and No. 84 of 2025 describe the Qualifying Activity of distribution and the audit obligation, and FTA Decision No. 6 of 2026 prescribes the procedures themselves. There is no emirate tier in this chain: Corporate Tax is federal, and no emirate issues its own QFZP rules. The Free Zone tier is present indirectly: the Free Zone Authority confirms to the company that its zone has Designated Zone status (paragraph (b) of Clause 2 of Article 3 of the Decision) but sets no tax rules.

The chain of replacements that must be read as a whole. Paragraph (l) first appeared in Ministerial Decision No. 265 of 2023, repealed by Ministerial Decision No. 229 of 2025, which added “materials” to the wording and extended its application across the whole life of the regime from 1 June 2023. Clause 3 of Article 2 of Ministerial Decision No. 84 of 2025, on which FTA Decision No. 6 of 2026 rests, refers in terms to distribution “in accordance with Ministerial Decision No. 265 of 2023” — that is, to an instrument that has already been repealed; FTA Decision No. 6 of 2026 closes the gap by citing Clause 3 of Article 2 of Decision No. 84 of 2025 together with paragraph (l) of Clause 1 of Article 2 of Decision No. 229 of 2025. The phrase “and its amendments” in the preamble to the FTA Decision, applied to Decisions No. 84 and No. 229, is standard boilerplate: as at 10 September 2026 the FTA’s Corporate Tax legislation index (52 items) contains no instrument amending either decision. The FTA guide on Free Zone Persons, CTGFZP1, remains in its first edition of 20 May 2024 and cites the repealed Decision No. 265 of 2023, so the guide’s examples remain applicable, while its references to provision numbers must be translated into the numbering of Decision No. 229 of 2025. How the 2025–2026 changes in federal tax legislation affected the other obligations of Free Zone companies is shown in What Changed in UAE Tax Legislation from 1 April 2026: An In-Depth Analysis for Businesses, Investors and International Groups.

Who Must Obtain the Report: QFZPs with the Paragraph (l) Activity — and No One Else

The person obliged under FTA Decision No. 6 of 2026 is a Qualifying Free Zone Person that is engaged in the Qualifying Activity of distribution of goods or materials in or from a Designated Zone. Both limbs of the definition are mandatory: the company must satisfy the conditions of Article 18 of Federal Decree-Law No. 47 of 2022 and must carry on the activity in paragraph (l) of Clause 1 of Article 2 of Ministerial Decision No. 229 of 2025. A company that lacks either limb does not obtain a report — but nor does it enjoy the 0% rate on distribution.

QFZP status under Article 18 of Federal Decree-Law No. 47 of 2022 requires: adequate substance in the UAE (under Article 8 of Cabinet Decision No. 100 of 2023 — core income-generating activities in a Free Zone or Designated Zone, adequate assets, staff and operating expenditure, with outsourcing permitted to a Person in a Free Zone or Designated Zone under the company’s supervision), derivation of Qualifying Income, no election for the standard regime under Article 19, compliance with the arm’s length principle and transfer pricing documentation (Articles 34 and 55), and satisfaction of any other conditions prescribed by the Minister. Those other conditions are set by Article 5 of Ministerial Decision No. 229 of 2025: compliance with de minimis and preparation of audited financial statements “in accordance with Ministerial Decision No. 84 of 2025 and any decision that amends or replaces it”. A Free Zone Person that operates from a Designated Zone but has elected the standard regime or has breached de minimis is not a QFZP and is outside Decision No. 6 of 2026.

The Qualifying Activity in paragraph (l) is defined in paragraph (l) of Clause 3 of Article 2 of Ministerial Decision No. 229 of 2025 as the buying and selling of goods, materials, component parts or any other items, which may include importation, storage, inventory management, handling, transportation and exportation, subject to three conditions: the activities are conducted in or from a Designated Zone; the goods or materials entering the UAE are imported through a Designated Zone; and the goods are supplied either to a customer that resells, processes or alters them (or parts of them) for the purposes of sale or resale, or to a public benefit entity. The last two conditions are exactly what the agreed-upon procedures report tests.

Who is outside the Decision. First, Free Zone Persons in zones that are not on the VAT list of Designated Zones: companies in DMCC, DIFC, ADGM, IFZA, Meydan, Dubai Internet City and other zones outside the list cannot use paragraph (l) at all, and their trade with customers outside Free Zones qualifies only on other grounds — for example, as trading of Qualifying Commodities under paragraph (c). Second, logistics operators: paragraph (m), “logistics services”, is defined as the storage and transportation of goods on behalf of another Person without taking title, and the Decision’s procedures do not extend to them; the FTA guide CTGFZP1 in Section 10.14 expressly separates the distributor, which “holds title to the products”, from the logistics provider. Third, mainland companies and Free Zone companies under the standard 9% regime. Fourth, a Designated Zone QFZP whose income consists exclusively of transactions with Free Zone Persons: that income qualifies under paragraph (a) of Clause 1 of Article 3 of Cabinet Decision No. 100 of 2023 without reference to a Qualifying Activity — provided that the counterparty is the Beneficial Recipient and the activity itself is not an Excluded Activity.

Author’s assessment: the boundary “engaged in the paragraph (l) activity” is best read broadly. Clause 1 of Article 2 of the FTA Decision ties the obligation to the fact of carrying on the Qualifying Activity in paragraph (l), not to the share of income derived from it. A Designated Zone distributor that classifies any part of its revenue from customers outside Free Zones as distribution income under paragraph (b) of Clause 1 of Article 3 of Cabinet Decision No. 100 of 2023 is relying on paragraph (l) — and should assume that the report is mandatory. An attempt to “overlook” the obligation by pointing to the small share of such sales backfires: on audit the whole of the distribution income is recharacterised as non-qualifying — and that income is precisely what decides the fate of the de minimis threshold. How trading from a Free Zone without Designated Zone status works and what limits it creates is examined in DMCC in 2026: The Real Cost, Corporate Tax Risks, and the Hidden Compliance Burden Entrepreneurs Do Not Calculate.

A VAT Designated Zone and a Corporate Tax Free Zone: Why One Status Does Not Guarantee the Other

A Designated Zone is a zone that is specified in a Cabinet Decision for VAT purposes and that, subject to the conditions of Article 51 of the Executive Regulation of the VAT Law (Cabinet Decision No. 52 of 2017, as amended by Cabinet Decision No. 88 of 2021), is treated as being outside the UAE for VAT. To qualify, the area must be a specific fenced geographic area with security measures and Customs controls monitoring the entry and exit of individuals and the movement of goods, with internal procedures for keeping, storing and processing goods, and with an operator that complies with the FTA’s procedures. A Free Zone for Corporate Tax purposes is, under Article 1 of Federal Decree-Law No. 47 of 2022, a designated and defined geographic area within the UAE specified in a Cabinet Decision at the suggestion of the Minister of Finance. These are two different statuses under two different tax laws, and one status does not guarantee the other: a zone may be a Free Zone for Corporate Tax but not a Designated Zone for VAT (DMCC, DIFC, ADGM), and, in theory, a VAT Designated Zone may not be included among the Free Zones for Corporate Tax purposes.

The definition for Corporate Tax purposes is in Article 1 of Cabinet Decision No. 100 of 2023: a Designated Zone is “a designated zone according to what is stated in Federal Decree-Law No. 8 of 2017 on Value Added Tax, and which has been included as a Free Zone in accordance with the Corporate Tax Law”. Federal Decree-Law No. 47 of 2022 contains no definition of a Designated Zone of its own. The FTA guide CTGFZP1 in Section 3.1 refers to the list of Designated Zones under Cabinet Decision No. 59 of 2017 and recommends that all taxpayers “check with their respective Free Zone Authority to confirm if they operate in a Free Zone or Designated Zone for Corporate Tax purposes”. No separately published list of Free Zones for Corporate Tax purposes exists as at September 2026, so a company confirms the status of its own zone through the Free Zone Authority — and FTA Decision No. 6 of 2026 makes that confirmation a mandatory element of the procedure: paragraph (b) of Clause 2 of Article 3 requires verification that the zone, port or area named in the import documents is formally designated as a Designated Zone “pursuant to relevant Cabinet Decisions, or other legislation in force”, and that “this should be confirmed by the relevant Free Zone Authority to the QFZP”.

The current VAT list of Designated Zones is maintained by the FTA on the basis of Cabinet Decision No. 59 of 2017 (effective from 1 January 2018) and five amending decisions: No. 35 of 2018 (from 18 June 2018), No. 43 of 2019 (from 4 July 2019), No. 34 of 2021 (from 4 April 2021), No. 63 of 2021 (from 1 July 2021) and No. 81 of 2021 (from 12 September 2021). The FTA list contains 27 entries, of which 24 are effective: three zones have been removed. The consolidated Executive Regulation of the VAT Law published by the FTA on 10 September 2026 shows that the newest amendment — Cabinet Decision No. 149 of 2026, effective from 1 October 2026 — does not touch Article 51.

The practical consequence for a distributor is that only companies that distribute “in or from” one of the 24 effective Designated Zones have access to paragraph (l) — provided that the zone is also included among the Free Zones for Corporate Tax purposes, which the Free Zone Authority confirms. The Dubai Free Zones with the largest number of companies — DMCC, IFZA, Meydan, the TECOM zones (Dubai Internet City, Dubai Media City) — have never been on the list, and a trading company from those zones can neither apply paragraph (l) nor, accordingly, obtain a report under Decision No. 6 of 2026. How Dubai’s two principal Designated Zones for distribution are organised is examined in JAFZA in 2026: the Jebel Ali Free Zone, Designated Zone Status, Offshore Companies and the Port and Dubai CommerCity in 2026: the Complete Breakdown of Dubai’s E-Commerce Free Zone. The customs and VAT mechanics of importing through such zones are explained in UAE Import, Customs and Import VAT in 2026: the Customs Client Code, Mirsal 2, 5% on CIF, Designated Zones and Recovering Import VAT.

The Two Conditions the Report Tests: Resale by the Customer and Importation through a Designated Zone

The subject matter of the agreed-upon procedures report consists of two factual conditions in Clause 3 of Article 2 of FTA Decision No. 6 of 2026, each of which reproduces one of the conditions of paragraph (l) of Clause 3 of Article 2 of Ministerial Decision No. 229 of 2025: first, the QFZP supplies goods or materials to customers that resell them or parts of them, or process or alter them for the purposes of sale or resale; second, goods or materials entering the UAE, if imported by the QFZP itself, are imported through a Designated Zone. The third condition of paragraph (l) — conducting the activity “in or from a Designated Zone” — is not separately tested by the report: it is evidenced by the company’s licence and registration in the Designated Zone and by its actual operations there, while the substance requirement (Article 8 of Cabinet Decision No. 100 of 2023) allows the core activities to be carried on “in a Free Zone or Designated Zone”.

Condition one — the customer’s status. The customer must be a reseller or a processor: a retail chain, a wholesaler, a next-tier distributor, a manufacturer that uses the goods as raw material or components. The FTA guide CTGFZP1 in Section 10.14.1 explains the other side of the rule: a sale to an end user — for example, of laptops or office supplies to a company for its own use — does not fall under paragraph (l), and the distributor “must conduct necessary due diligence (such as ‘know your client’ (KYC), seeking confirmation by way of an undertaking or a contract, etc)”. FTA Decision No. 6 of 2026 turns that recommendation into a list of evidence: valid trade licences of customers with activities indicative of reselling; signed declarations or written confirmations from customers that the goods are acquired for sale, resale or donation to a public benefit entity; sales agreements, invoices, purchase orders. A sale to a public benefit entity is permitted by paragraph (l) as a separate case, and the supporting documents for it are analogous.

Condition two — the route of the goods. The condition of importation through a Designated Zone concerns only goods “entering the UAE”, and only where the QFZP itself imports them. The guide CTGFZP1 in Section 10.14 clarifies that the requirement “only applies to the distribution of foreign goods to customers in the UAE outside of a Designated Zone” and does not limit the mode of transport. Three situations in which the requirement does not operate: the goods never enter the UAE (third-port trading, where the goods go directly from a foreign supplier to a foreign customer); the goods are already in the UAE and are exported; the goods were produced or already cleared in the UAE and are sold domestically. The guide’s examples are summarised in the table.

Author’s assessment: the most vulnerable point is not the route of the goods but the make-up of the customer base. The import route is within the distributor’s own control: it is enough to clear imports through the Designated Zone and keep the customs declarations. The customer’s status depends on third parties, and its evidence — a licence with a trading activity and a signed declaration — must be obtained before or at the time of the transaction; otherwise, by the time the auditor starts work, the customer may have changed its licence, closed down or refused to sign a document retrospectively. Companies that sell through agents or under distribution agreements with agent protection need to separate distribution from agency: the differences and the registration consequences are explained in UAE Commercial Agency Law 2026: Agent Protection, Registration, and the Risks for a Foreign Principal, and the tariff side of importation in Customs Duties in the UAE 2026: Rates, Exemptions, and the Free Zone Regime.

What an ISRS 4400 Report Is, and How an Agreed-Upon Procedures Engagement Differs from an Audit

An agreed-upon procedures engagement is, under the definition in paragraph 13(b) of ISRS 4400 (Revised), an engagement in which the practitioner performs procedures agreed with the engaging party (and, where relevant, other parties) and reports the findings, without expressing an opinion or an assurance conclusion. The standard was issued by the International Auditing and Assurance Standards Board (IAASB) in April 2020 and is effective for engagements whose terms are agreed on or after 1 January 2022 (paragraph 11). Paragraph 6 of the standard states expressly that an agreed-upon procedures engagement “does not involve obtaining evidence for the purpose of the practitioner expressing an opinion or an assurance conclusion in any form”. That is precisely the format the FTA chose: Clause 2 of Article 2 of Decision No. 6 of 2026 requires the report to be prepared “in accordance with the International Standard on Related Services 4400, Agreed-Upon Procedures Engagements, issued by the IAASB, and the applicable legislation governing auditing practices in the State”.

What the report contains. Under paragraph 13(f) of ISRS 4400, findings are “the factual results of agreed-upon procedures performed” and “are capable of being objectively verified”. Paragraph 30 of the standard sets the mandatory elements of the report: a title, the addressee, a statement of purpose, identification of the subject matter, a statement that the engagement was performed under ISRS 4400, statements on compliance with ethical requirements and on independence (paragraph 30(l)), a description of each procedure, the findings for each procedure including exceptions, an express statement that the engagement “is not an assurance engagement and accordingly, the practitioner does not express an opinion or an assurance conclusion”, the signature, date and location. FTA Decision No. 6 of 2026 adds requirements of its own: under Clause 6 of Article 3 each procedure is accompanied by a description of the nature of the evidence, the timing and the extent of the work together with the factual findings, and the details of the samples are set out in an appendix; under Clause 7 of Article 3 changes in the wording of procedures that do not alter their substance are also disclosed in an appendix.

Independence as a requirement of the Decision, not of the standard. ISRS 4400 does not itself require the practitioner to be independent — it only requires the report to disclose whether the practitioner is independent. FTA Decision No. 6 of 2026 makes independence a mandatory condition: Clause 1 of Article 2 speaks of an “independent external auditor”, and Clause 2 of Article 2 subjects the report to UAE auditing legislation, where independence and the prohibition of conflicts of interest are set by Article 17 of Federal Decree-Law No. 41 of 2023. An in-house accountant, the finance director or an affiliated consulting company may not prepare the report.

Author’s assessment: the “facts without an opinion” format protects the practitioner, not the company. In an ISRS 4400 report the practitioner does not assert that the conditions of paragraph (l) are met; the practitioner records that 47 of the 50 licences inspected contain a trading activity and that an exception was found in the other three. The FTA will evaluate those facts, and every recorded exception will enter the company’s tax file before the company has had a chance to explain it. Preparation for the report is therefore not work with the auditor but work on the company’s own sales: the fewer the exceptions in the sample, the fewer the grounds for a subsequent audit. The general rules of the statutory audit, in addition to which the report is obtained, are described in Corporate Audit Requirements in the UAE 2026: Who Needs One, When, and Under What Rules.

Who May Issue the Report: The Company’s Auditor or Another Auditor Licensed in the UAE

The issuer of the report under FTA Decision No. 6 of 2026 is, under Clause 1 of Article 2, “the independent external auditor, who is also responsible for the annual audit of the financial statements or any other independent auditor licensed in the State”. The wording allows two options: the report is issued by the same audit firm that audits the QFZP’s financial statements under Ministerial Decision No. 84 of 2025, or by another firm holding an auditor’s licence in the UAE. The FTA treats both options as equivalent; in practice they differ in cost and in how well the firm already knows the business.

The licensing of auditors is governed by Federal Decree-Law No. 41 of 2023 on Regulating the Auditing and Accounting Professions, issued on 28 September 2023 and in force from 28 March 2024 — six months after publication in the Official Gazette (Article 40); Article 39 repealed Federal Law No. 12 of 2014 on the Regulation of the Auditing Profession. Under Article 8 the application for a licence is submitted to the Ministry (the Ministry of Economy, since 2025 the Ministry of Economy and Tourism), which keeps the register of auditors; Article 17 sets the independence requirements and prohibitions of conflicts of interest, including a ban on having any transaction or interest with the client or parties related to the client; Article 33 assigns the adoption of auditing standards to a decision of the Minister. What matters in practice for a QFZP is to check that the chosen firm and the signing partner are on the ministerial register at the date of signing the report: the licence of an “accounting” or “consulting” company in a Free Zone is not an auditor’s licence.

Criteria for choosing between the statutory auditor and a separate firm. The first criterion is economy of evidence: the statutory auditor has already tested revenue, receivables and inventory, and is therefore familiar with the customers and warehouse records needed for the Article 3 procedures, and can run the ISRS 4400 sampling in parallel with the audit. The second criterion is competence in customs documents: the Designated Zone importation procedures call for reading customs declarations, bills of lading and airway bills, and not every audit firm has that experience. The third criterion is timing: the audit of the statements is completed before the return is filed (within 9 months after the end of the period), while the agreed-upon procedures report is due 30 days after that, and a one-month gap leaves little time for a new firm starting from scratch. The fourth criterion is independence: an auditor cannot keep the company’s books and issue the report at the same time; outsourced bookkeeping and the audit must be split between independent providers.

What the QFZP must agree with the auditor before the work begins. Under paragraph 22 of ISRS 4400 the practitioner accepts the engagement only if the procedures and findings can be described objectively and the terms of the engagement are clear and not misleading; under Clause 5 of Article 3 of Decision No. 6 of 2026 the sampling approach for documents not named in the Decision is agreed between the QFZP and the auditor. The engagement letter should reproduce the six procedures of Article 3, the sampling formula and the 10% margin of error, the list of documents under Clauses 4–5 of Article 2, and a delivery date for the report that leaves a margin before the deadline for submission to the FTA.

Author’s assessment: “any other auditor” is a fully-fledged option, not a fallback, for groups with several QFZPs. A holding in which two or three companies distribute from Designated Zones with different statutory auditors is better served by entrusting all the reports under Decision No. 6 of 2026 to one firm: a single sampling methodology, uniform customer declaration forms and one submission timetable reduce the risk of inconsistencies between the reports of different companies of the same group, which the FTA will see side by side. How to organise accounting and audit so that the documents for the report accumulate automatically is shown on the page UPPERSETUP Accounting Support for Companies.

The Six Procedures of Article 3: What Exactly the Auditor Checks and on Which Sample Population

The agreed-upon procedures under FTA Decision No. 6 of 2026 are six checks prescribed by Article 3 of the Decision: three on the customers’ status (Clause 1) and three on importation through a Designated Zone (Clause 2). For each procedure the Decision specifies what is to be examined, the Sample Population from which the sample is drawn and the form of the factual finding. The auditor may not replace the prescribed procedures with its own, but under Clause 7 of Article 3 may change the wording without altering the substance, disclosing the change in an appendix.

General rules for all procedures. First, the Sample Size for each procedure is calculated under the formula in Clause 3 of Article 3, and the highest-value items — the largest customers, agreements and import consignments — are always included in the sample. Second, under Clause 5 of Article 3 the sampling approach for other documents not listed in the Article is agreed between the QFZP and the auditor. Third, under Clause 6 of Article 3 each procedure is accompanied by a description of the nature of the evidence, the timing and extent of the work performed and the factual findings, with the details of the samples set out in an appendix to the report.

What an “exception” means in each procedure. For procedure 1(a) an exception is a licence without a trading activity or an expired licence; for 1(b) — a missing declaration, a declaration without a signature or date, or one relating to another period; for 1(c) — retail quantities and prices, or an agreement with the features of a supply for the customer’s own use. For 2(a) — a declaration showing a port of entry outside a Designated Zone, or no declaration for a consignment; for 2(b) — a zone whose status is not confirmed by the Free Zone Authority, or a zone removed from the list (for example, Dubai Textile City after 4 April 2021); for 2(c) — no warehouse record of the consignment’s receipt in the zone. The auditor records exceptions without assessing their tax consequences; the FTA determines the consequences, which the section on the chain of consequences below examines.

Author’s assessment: procedure 2(b) shifts onto the company a risk that did not exist before. Confirmation of Designated Zone status by the Free Zone Authority is a new document that nobody required from companies before Decision No. 6 of 2026. The Decision neither prescribes the form and procedure for issuing such a confirmation nor imposes any duty on the Free Zone Authorities, so it must be requested in advance, before the auditor begins work, and not in the final month before submission. Companies that import through several zones (for example, sea consignments through JAFZA and air consignments through Dubai Airport Free Zone) will need a confirmation from each authority.

How the Sample Is Calculated: The Formula with a 10% Margin of Error and What It Means in Practice

The Sample Size is, under Clause 3 of Article 3 of FTA Decision No. 6 of 2026, the number of documents selected for testing in each procedure, calculated by the formula: Sample Population ÷ (1 + Sample Population × (Margin of Error)²). Under Clause 4 of Article 3 the Sample Population is the total number of customers, sales agreements or imports, depending on the procedure, and the Margin of Error is 10%. In applied statistics the formula is known as Slovin’s formula; the Decision itself does not use the name, and at a 10% margin of error the formula produces the denominator “1 + 0.01 × N”. Beyond the calculated sample, the highest-value items must always be included in the test — a requirement repeated in each of the six procedures.

Three properties of the formula that determine the workload. First: with a small number of customers the sample coincides with the population — a distributor with ten customers effectively undergoes a full check, and every missing declaration becomes an exception in the report. Second: with a large population the sample is capped at roughly one hundred items, so for a distributor with thousands of customers the auditor’s workload barely depends on the number of customers, while the mandatory inclusion of the largest items gains weight — they generate most of the revenue, and an exception in one of them weighs more than in a dozen small ones. Third: the Decision sets no rounding rule for fractional results; the conservative practice is to round up, and it should be recorded in the engagement letter with the auditor.

Sampling across three different populations. Procedures 1(a) and 1(b) are computed on the number of customers, procedure 1(c) on the number of agreements, and procedures 2(a)–2(c) on the number of imports. For a distributor with 100 customers, 400 agreements and 60 import consignments, the auditor will test 50 licences and 50 declarations, 80 agreements and 37.5 (that is, 38) imports — each population separately, with the largest items necessarily included in each.

Author’s assessment: the formula makes “partial” compliance pointless. A company whose declarations are signed by 70% of its customers will, with 20 customers, get a sample of 17 and, on those proportions, about five exceptions; with 1,000 customers — a sample of 91 and about 27 exceptions. In both cases the report will show that the resale condition is not evidenced for a substantial part of the transactions, and the sum of the exceptions will become the starting point for recharacterising the income. A distributor has one target: 100% of customers with a licence and a declaration on file at the time of shipment.

Which Documents the Distributor Must Accumulate during the Tax Period, and How to Keep Them

The documentation under FTA Decision No. 6 of 2026 consists of two sets of evidence that the QFZP must “collect, maintain and retain” under Clauses 4 and 5 of Article 2 of the Decision: a set on the customers’ status — for each transaction — and a set on the importation of goods through a Designated Zone — for each import consignment. Both sets are built up during the Tax Period, not when the report is being prepared, and are kept under the general rule of Clause 1 of Article 56 of Federal Decree-Law No. 47 of 2022 — seven years after the end of the Tax Period to which they relate.

Rules for electronic record-keeping. FTA Decision No. 4 of 2026 on the Rules and Requirements for Maintaining the Information Contained in Accounting Records and Commercial Books was issued on 2 June 2026 and has been effective since 30 July 2026 — the date of its publication in the Official Gazette. Under Article 2 the records must be complete and identical to the originals, clear and easily legible, and access to them, including the system in which they are stored, must be given to the FTA on request. Under Article 3 an electronic copy must contain all pages in the original order, partial scanning is not accepted, and where encryption or password protection is used the company must provide the FTA with the keys and passwords. Under Article 4 record-keeping may be outsourced to a third party, but the company remains legally responsible. For a record-keeping failure Cabinet Decision No. 75 of 2023 imposes a penalty of AED 10,000 for each violation and AED 20,000 for a repeated violation within 24 months, and AED 5,000 for failure to submit data in Arabic when requested.

How to build document collection into the operating cycle. The first step is to include in the standard supply agreement a clause on the customer’s status as a reseller and its duty to provide its licence on each renewal. The second is to make a signed declaration a condition of opening a credit limit or of the first shipment in the calendar year. The third is to link each import consignment in the accounting system to the customs declaration number and the warehouse receipt, so that the auditor can follow the chain “declaration → receipt → shipment to the customer” for every sampled item. The fourth is to keep a customer register with the dates of licences and declarations, from which the Sample Population for procedures 1(a) and 1(b) is drawn; where bookkeeping is outsourced, that task naturally sits with the accounting provider — see UPPERSETUP accounting support for companies. Mandatory electronic invoicing, which the UAE is introducing in phases, simplifies the third and fourth tasks if invoice data is synchronised with the customer register: see Mandatory Electronic Invoicing in the UAE: Why 2026 Became the Point of No Return for Business.

Author’s assessment: the customer declaration is the cheapest and the most underrated document. The customer’s licence shows the permitted activities but not the purpose of a specific consignment; the declaration closes exactly that gap and at the same time satisfies the “know your client” requirement in Section 10.14.1 of the guide CTGFZP1. A company that starts collecting declarations only in 2027 will have to obtain them retrospectively for 2026 from customers, some of whom will by then have changed their licence or stopped buying — and the auditor will record a missing declaration in the sample as an exception whatever the reason.

Deadlines: When to Submit the Report, How It Relates to the Return and Which Periods Are Covered

The deadline for submitting the agreed-upon procedures report is, under Clause 7 of Article 2 of FTA Decision No. 6 of 2026, “no later than thirty (30) days following the deadline to file the Corporate Tax return for the relevant Tax Period, or such other date as determined by the Authority”. The 30 days run from the filing deadline, not from the date of actual filing: under Clause 1 of Article 53 of Federal Decree-Law No. 47 of 2022 the return is filed no later than nine months from the end of the Tax Period “or by such other date as directed by the Authority”. A company that files its return early neither loses nor gains time for the report.

Which periods are covered. Under Article 5 the Decision applies to Tax Periods commencing on or after 1 January 2026. For a calendar financial year the first covered period is 2026. For a non-standard financial year that began before 1 January 2026 (for example, 1 July 2025 to 30 June 2026) no report is required for that period, and the first covered period is the one beginning on 1 July 2026. The report is obtained for every Tax Period in which the QFZP carried on the paragraph (l) activity — the obligation is recurring, not one-off.

The reservation “or such other date as determined by the Authority”. The FTA retains the power to move the deadline by a separate decision — as it did by FTA Decision No. 7 of 2024 of 25 September 2024, which moved the filing and payment deadline to 31 December 2024 for Tax Periods that ended on or before 29 February 2024. As at 10 September 2026 no such decision appears in the FTA’s legislation index, and the general rule “9 months + 30 days” is the one to plan around. The PwC Middle East alert of 20 July 2026 and the Deloitte Middle East alert state the deadline in the same way — 30 days after the return filing deadline — whereas the Alvarez & Marsal alert speaks of “30 days after the CT return is filed”, which does not match the text of the Decision. The Decision does not describe the technical channel of submission: Clause 7 of Article 2 speaks of submission “to the Authority”, and in practice companies should expect an upload through the EmaraTax portal or a request from the FTA in the course of an audit. Until the FTA issues separate clarifications, the only reliable strategy is to have the report signed by the auditor before the deadline and ready for submission on first request.

Interaction with the audit of the statements and other deadlines. The audited financial statements under Ministerial Decision No. 84 of 2025 are needed earlier than the report — as the basis of the return; in practice the audit is completed several months before the return is filed, and it is logical to have the agreed-upon procedures performed by the same auditor immediately after the audit, so that the report exists by the return deadline. Separate deadlines apply to transfer pricing documentation, which under Clauses 3–4 of Article 55 of Federal Decree-Law No. 47 of 2022 must be provided within 30 days of an FTA request; for a distributor that buys goods from related parties abroad, that documentation is examined in parallel. The general calendar of Corporate Tax obligations in 2026, including registration, returns and penalties, is collected in UAE Corporate Tax 2026: Rates, QFZP, Small Business Relief, Deadlines and Penalties — The Complete Guide.

Author’s assessment: the 30 days are not a month for the work but a month for the signature. The gap between the return deadline and the report deadline assumes that the procedures have already been performed: no auditor can collect licences and declarations from a hundred customers in a month if the company has not done so earlier. A realistic timetable for the 2026 calendar year is: documents collected by 31 December 2026, procedures performed together with the audit of the statements in the first half of 2027, the report signed at the same time as the audit report and submitted together with the return, without waiting for 30 October 2027.

What Happens without the Report: The Chain of Consequences from Non-Qualifying Income to Loss of QFZP Status for Five Periods

The consequence of not submitting the report is, under Clause 8 of Article 2 of FTA Decision No. 6 of 2026, a legal fiction: if the QFZP fails to submit the report, “the conditions specified in Clause 3 of Article 2 of Ministerial Decision No. 84 of 2025 and paragraph (l) of Clause 1 of Article 2 of Ministerial Decision No. 229 of 2025 shall not be considered to be met”. The Decision itself sets no penalty in dirhams, and the schedule of administrative penalties in Cabinet Decision No. 75 of 2023 contains no separate item for a missing report. The cost of the failure arises from the chain of rules governing the QFZP regime, and depending on the reading that chain leads to two different outcomes.

Outcome one — recharacterisation of the distribution income. If the conditions of paragraph (l) are not met, distribution ceases to be a Qualifying Activity, and the income from transactions with persons outside Free Zones that the company attributed to paragraph (b) of Clause 1 of Article 3 of Cabinet Decision No. 100 of 2023 becomes non-qualifying. That income enters the de minimis computation under Article 4 of Decision No. 100 of 2023 and Article 3 of Ministerial Decision No. 229 of 2025: non-qualifying Revenue must not exceed 5% of total Revenue or AED 5,000,000, whichever is lower. While the threshold is respected, the recharacterised income remains Qualifying Income under paragraph (d) of Clause 1 of Article 3 of Decision No. 100 of 2023 (“any other income provided that the de minimis requirements are satisfied”) and is taxed at 0%. The 9% rate “from the first dirham” under Clause 2 of Article 3 of Federal Decree-Law No. 47 of 2022 applies, in the case of a company that remains a QFZP, only to income carved out of Qualifying Income by the structure of Article 3 of Decision No. 100 of 2023 itself — permanent establishment income, immovable property income and non-qualifying intellectual property income (Articles 5–6 and Clause 2 of Article 7 of the Decision). For a distributor whose sales to mainland resellers make up the bulk of its revenue the threshold is breached automatically, and under Clause 2 of Article 5 of Decision No. 229 of 2025 the company ceases to be a QFZP from the beginning of that Tax Period and for the four subsequent Tax Periods — five periods in all. After the loss of status the general regime of Clause 1 of Article 3 of Federal Decree-Law No. 47 of 2022 applies: 0% up to AED 375,000 of Taxable Income (the threshold set by Cabinet Decision No. 116 of 2022) and 9% above.

Outcome two — direct loss of status through the audit condition. Clause 8 of Article 2 of the Decision also deems Clause 3 of Article 2 of Ministerial Decision No. 84 of 2025 not to be met, and paragraph (b) of Clause 1 of Article 5 of Decision No. 229 of 2025 requires the QFZP to prepare audited financial statements “in accordance with Ministerial Decision No. 84 of 2025”. On that reading, a missing report means that one of the conditions of QFZP status as such is not met — with the result under Clause 2 of Article 5: loss of the status for five periods, regardless of whether the distribution income falls within de minimis. The textual basis for that reading is not beyond doubt: paragraph (b) of Clause 1 of Article 5 speaks of “preparing audited financial statements” in accordance with Decision No. 84 of 2025, while Clause 3 of Article 2 of Decision No. 84 of 2025 frames compliance with the additional procedures as a separate obligation. Alvarez & Marsal in its alert of 21 July 2026 describes the consequence as the QFZP “no longer satisfying the qualifying conditions for that tax period” with taxation at the standard rate of 9% — that is, it assumes a loss of status but does not address the four subsequent periods. The primary text of the Decision admits both chains; conservative planning should assume the second outcome.

Associated penalties under Cabinet Decision No. 75 of 2023. The report itself carries no penalty, but its absence usually goes together with violations for which penalties are set: failure to keep the required records — AED 10,000, and AED 20,000 for a repeated violation within 24 months; late filing of the return — AED 500 for each month or part thereof for the first twelve months and AED 1,000 per month from the thirteenth month; an incorrect return — AED 500 unless the error is corrected before the filing deadline. Further: a voluntary disclosure — 1% per month of the tax difference, and where no disclosure was made before notification of a tax audit — 15% plus 1% per month; failure to settle the tax on time — 14% per annum, accrued monthly; failure to facilitate the tax auditor — AED 20,000. A company that kept declaring 0% on distribution without the report will, on assessment, face the tax for five periods, the penalty for an incorrect return and the late-payment penalty all at once.

Author’s assessment: the cost of the report is not comparable with the cost of its absence. The cost of the agreed-upon procedures is driven by the size of the sample — for a company with a hundred customers, that is a check of about fifty licences and declarations and a corresponding number of agreements and import consignments; the cost of losing QFZP status for a distributor with a profit of AED 6,000,000 is about AED 2,500,000 over five periods plus penalties. Economically the report is the cheapest line in the budget of the 0% regime, and the only rational reason to forgo it is a deliberate move to the standard 9% regime with the nil rate up to AED 375,000. How Free Zone companies lose the zero rate on other grounds, and why it is discovered late, is examined in How Companies in Free Zones Lose 0% Corporate Tax in the UAE in 2026 — and Why Most Notice the Risk Too Late, and the procedure for challenging assessments in UAE Tax Penalties, Voluntary Disclosure and Appeals in 2026: Tax Assessment Review, Reconsideration, the TDRC and the Courts.

Step-by-Step Algorithm: How a QFZP Distributor Prepares for Its First Report for 2026

The algorithm for preparing the report under FTA Decision No. 6 of 2026 is a sequence of ten steps that begins with checking whether the Decision applies and ends with submitting the report to the FTA; for the 2026 calendar year the first five steps must be completed before the year ends, because documents for transactions completed before those steps are in place will have to be collected retrospectively.

1.        Confirm that the Decision applies. Check that the company operates in or from one of the 24 effective Designated Zones on the FTA list (and that the Free Zone Authority confirms its status as a Free Zone for Corporate Tax purposes), holds QFZP status (the conditions of Article 18 of Federal Decree-Law No. 47 of 2022, Article 8 of Cabinet Decision No. 100 of 2023, Article 5 of Ministerial Decision No. 229 of 2025) and classifies at least part of its revenue as distribution income under paragraph (l). If the company sells only to Free Zone Persons or provides logistics without taking title to the goods, the Decision does not apply — but the classification of income must be recorded in writing.

2.        Request confirmation of Designated Zone status. Ask the Free Zone Authority for written confirmation that the zone’s territory (or its specific part — the port, the warehouse) is designated as a Designated Zone by a Cabinet Decision, with the reference and date of the decision. Where imports pass through several zones — a confirmation from each.

3.        Take stock of the customers. Compile a register of all 2026 customers with three fields: a copy of the licence and its expiry date, the existence of a signed declaration for 2026, and the nature of the transactions (wholesale, processing, end use, natural person). Put end-user customers and natural persons on a separate list: the income from them will not be qualifying whatever the report says.

4.        Make the customer declaration a condition of shipment. Approve a declaration form (signature of an authorised person, date, reference to the QFZP’s Tax Period, purpose of the goods — sale, resale, processing or donation to a public benefit entity) and include in supply agreements the customer’s duty to provide its licence and the declaration annually.

5.        Link imports to the warehouse. Configure the accounting system so that every import consignment carries the customs declaration number showing the zone of entry, the shipping document and the warehouse receipt in the Designated Zone; check electronic storage against FTA Decision No. 4 of 2026 — complete copies, legibility, availability of passwords.

6.        Choose the auditor and agree the engagement letter. Decide whether the report will be issued by the statutory auditor or by another licensed firm; check the firm’s entry in the register of auditors; include in the engagement letter the six procedures of Article 3, the sampling formula with a 10% margin of error, the rounding rule, the list of documents under Clauses 4–5 of Article 2 and the delivery date of the report.

7.        Calculate the samples in advance. At the year end, determine the Sample Populations — the number of customers, agreements and imports — and calculate the Sample Size for each; draw up the list of the largest items that will necessarily enter the sample and check the completeness of their documents before the auditor begins work.

8.        Run an internal pre-check. Have the finance function or an external adviser walk through the six procedures on the company’s own sample, identify gaps (expired licences, missing declarations, consignments without a warehouse receipt) and close them before the audit; for customers from whom documents cannot be obtained, estimate the share of their revenue in the de minimis computation.

9.        Have the procedures performed together with the audit of the statements. Arrange for the agreed-upon procedures to run in parallel with the audit of the financial statements under Ministerial Decision No. 84 of 2025 — before the return is filed within 9 months after the end of the period; obtain the signed report with the appendices under Clauses 6–7 of Article 3.

10.    Submit the report and keep proof of submission. File the report with the FTA no later than 30 days after the return deadline (for 2026 — by 30 October 2027), keep the confirmation of filing, and retain the report with the supporting documents for seven years after the end of the Tax Period.

Author’s assessment: steps 3–5 determine the result; steps 6–10 merely record it. The auditor works with what the company has accumulated, and no firm’s qualifications can replace a missing customer declaration. For companies that begin implementing these steps in the second half of 2026 the realistic goal is a complete set for the largest customers and import consignments (they are certain to enter the sample) and the widest possible coverage of the rest. The legal side of contract work with customers — wording on reseller status, liability for an inaccurate declaration — is worth working through with lawyers: the relevant UPPERSETUP practice is described on the page Legal and Strategic Consulting.

Typical Mistakes of QFZP Distributors under Decision No. 6 of 2026, and What They Cost

The typical mistakes in preparing the agreed-upon procedures report are seven recurring decisions, each of which either makes the report unusable or turns it into a list of exceptions. They are set out below with the provision that is breached and the cost of the mistake in terms of the QFZP regime.

Mistake 1 — assuming that the audit of the financial statements is enough. The audit under Ministerial Decision No. 84 of 2025 confirms the fair presentation of the statements, while the report under Decision No. 6 of 2026 confirms the two conditions of paragraph (l); neither document replaces the other, and Clause 3 of Article 2 of Decision No. 84 of 2025 expressly requires the distributor to “comply with any additional procedures prescribed by the Authority”. Cost: under Clause 8 of Article 2 of the Decision the conditions are deemed not met — the risk of losing QFZP status for five periods; for a company with a profit of AED 6,000,000 that is about AED 506,250 of tax a year.

Mistake 2 — confusing a VAT Designated Zone with a Corporate Tax Free Zone. A company from a zone that is not on the list under Cabinet Decision No. 59 of 2017 as amended (DMCC, IFZA, Meydan, the TECOM zones) classifies its trade with mainland customers as distribution under paragraph (l). Cost: all such income is non-qualifying from the start of the regime, the de minimis threshold of 5% / AED 5,000,000 is breached, QFZP status is lost for five periods, and the assessment comes with the penalty for an incorrect return (AED 500 per period) and 14% per annum on the unpaid tax.

Mistake 3 — treating the customer’s licence as proof of resale. The licence shows the permitted activities, whereas procedure 1(b) requires a signed and dated declaration on the purpose of the goods for the Tax Period. Cost: an exception in the report for every sampled customer without a declaration; with 20 customers and 70% declaration coverage — about five exceptions out of seventeen tested, which puts the qualification of a substantial part of the revenue in doubt.

Mistake 4 — importing goods by the “convenient” route. Some consignments are cleared directly at a port or airport outside a Designated Zone because it is faster or cheaper, and are then sold to mainland resellers. Cost: exceptions under procedures 2(a) and 2(c) for every such consignment; the income from the sale of those goods is non-qualifying (Example 83 of the guide CTGFZP1), and if it exceeds the de minimis threshold the status is lost. The logistics saving on one consignment is not comparable with 9% of profit over five periods.

Mistake 5 — selling to natural persons and end users in “wholesale” quantities. Sole establishments are natural persons, and transactions with them are excluded by paragraph (a) of Clause 2 of Article 2 of Ministerial Decision No. 229 of 2025 (that paragraph’s carve-outs for ships, funds, wealth management and aircraft do not extend to distribution); companies that buy goods for their own use are end users under Section 10.14.1 of the guide. Cost: excluded income is not merely non-qualifying — it counts in full towards non-qualifying Revenue for de minimis; on Revenue of AED 40,000,000 the 5% threshold is only AED 2,000,000.

Mistake 6 — entrusting the report to an accounting or consulting company without an auditor’s licence. Clause 1 of Article 2 of the Decision requires an independent external auditor licensed in the UAE — that is, licensed under Federal Decree-Law No. 41 of 2023; ISRS 4400 requires independence to be disclosed, and the Decision requires it to exist. Cost: the report does not comply with the Decision, the obligation is deemed unfulfilled, and the fee is wasted; a repeat engagement with a licensed auditor in the final month before the deadline is physically impossible with a large sample.

Mistake 7 — starting to collect documents after the end of the Tax Period. Clauses 4–5 of Article 2 require documents to be collected for each transaction and each consignment; the auditor will check the date of any retrospective declaration and whether it relates to the period in question, and customers that have stopped buying can no longer be found. Cost: a share of exceptions in the sample proportional to the share of undocumented transactions, and hence recharacterisation of the income; in addition — a penalty of AED 10,000 for failing to keep the required records under Cabinet Decision No. 75 of 2023, AED 20,000 on repetition within 24 months.

Author’s assessment: all seven mistakes share one cause — treating Decision No. 6 of 2026 as a formality “for the auditor”. The Decision regulates not the audit but the distributor’s operating model: with whom it contracts, through which zone it imports the goods and what it keeps in its accounting system. Companies that write these rules into their supply agreements, logistics instructions and accounting policy will get a report without exceptions as a by-product; companies that leave everything as it is and “order a report” in 2027 will get a document recording their own breaches. How the substance requirements in the zone relate to the operating model is shown in Economic Substance in the UAE in 2026: Real Business Presence as a Condition of Tax Stability.

Who the Designated Zone Distribution Model with the Report Suits, and Who Is Better Served by Another Structure

The Designated Zone QFZP distributor model is a structure in which a Free Zone company on the list of Designated Zones buys goods abroad or in the UAE, imports them through its zone and sells them to resellers and processors at a 0% Corporate Tax rate, evidencing the conditions with an annual ISRS 4400 report. The model does not suit everyone: its advantage — a zero rate on profit from sales to mainland customers, unavailable to companies in other Free Zones — is paid for with three constraints: the make-up of the customer base (only resellers, processors and public benefit entities), the import route (only through a Designated Zone) and the annual check by an auditor.

Whom the model suits. First, importer-distributors with wholesale customers — retail chains, regional distributors, manufacturers using the goods as raw material — whose customer base is stable and can be documented. Second, regional hubs that combine re-export to the countries of the region (with the goods either bypassing the UAE or passing through the zone) with distribution inside the UAE: both lines qualify, and the report covers only the domestic one. Third, groups in which a Designated Zone distributor supplies goods to the group’s own manufacturing or assembly plant in the UAE — processing for sale is expressly named in paragraph (l).

Whom the model does not suit. First, sellers to final consumers — e-commerce to natural persons, retail operators, suppliers of office equipment and consumables to companies for their own use: their income is excluded or non-qualifying whatever the zone, and Designated Zone status (Dubai CommerCity, for example) does not by itself deliver the zero rate. Second, companies for which speed of delivery through the nearest port or airport outside a Designated Zone matters more than the tax saving. Third, small trading companies with profit around or below AED 375,000, for which the standard regime with its nil rate up to that threshold, or Small Business Relief, is simpler and cheaper than the audit, the report and the QFZP documentation. Fourth, agents and commission agents that do not take title to the goods: their income qualifies only in transactions with Free Zone Persons.

Author’s assessment: Decision No. 6 of 2026 makes the choice of structure a conscious one. Until 2026 a company could register in a Designated Zone “just in case” and leave the question of income qualification to a tax audit; now the annual report forces it to answer every year whether the business matches the paragraph (l) distribution model. For companies with pure B2B distribution that is confirmation of status and protection against recharacterisation; for companies with a mixed customer base it is a signal to split the flows between two legal entities: a Designated Zone distributor for resellers and a mainland or other company for final consumers. A comparison of the Free Zone and mainland regimes on other parameters is in Mainland vs Free Zone in 2026: the New Rules That Changed Everything, and the pricing requirements in transactions with related suppliers in Transfer Pricing in the UAE 2026: the Disclosure Form, Local File and Master File, Thresholds and the Arm’s Length Principle.

FAQ: The ISRS 4400 Report under FTA Decision No. 6 of 2026 for a QFZP Distributing through a Designated Zone

What is FTA Decision No. 6 of 2026 and whom does it concern?

Federal Tax Authority Decision No. 6 of 2026, issued on 2 June 2026, obliges a Qualifying Free Zone Person (QFZP) engaged in the Qualifying Activity of distribution of goods or materials in or from a Designated Zone (paragraph (l) of Clause 1 of Article 2 of Ministerial Decision No. 229 of 2025) to obtain an agreed-upon procedures report under ISRS 4400 from an independent licensed auditor every year, and to submit it to the FTA. The Decision applies to Tax Periods commencing on or after 1 January 2026 and does not concern companies in Free Zones outside the list of Designated Zones, logistics operators that do not take title to the goods, or mainland companies.

Is the report under Decision No. 6 of 2026 needed if the company already has audited financial statements?

Yes. The audit of the statements under Ministerial Decision No. 84 of 2025 is mandatory for every QFZP, while the agreed-upon procedures report is an additional requirement for Designated Zone QFZP distributors under Clause 3 of Article 2 of the same Decision No. 84 of 2025, as elaborated by FTA Decision No. 6 of 2026. Neither document replaces the other; both may be prepared by the same audit firm.

What does the auditor check in the ISRS 4400 report for a QFZP?

The auditor performs the six procedures of Article 3 of the Decision: three on the customers’ status (licences with trading activities, signed declarations that the goods are acquired for resale, agreements and invoices with the features of wholesale) and three on the importation of the goods (customs declarations and shipping documents naming the Designated Zone, confirmation of the zone’s status by the Free Zone Authority, warehouse records of the goods’ receipt in the zone). The auditor records facts and exceptions but expresses no opinion on compliance with the conditions.

How is the Sample Size calculated under FTA Decision No. 6 of 2026?

By the formula in Clause 3 of Article 3: the Sample Size equals the Sample Population divided by (1 + Sample Population × 0.01), where 0.01 is the square of the 10% margin of error. With 10 customers the formula gives 9.1, with 50 — 33.3, with 100 — 50, with 500 — 83.3, with 1,000 — 90.9; the sample does not exceed roughly 100 items even for a very large population. The highest-value items must always be included in the sample; the Decision sets no rounding rule.

When is the agreed-upon procedures report for 2026 due?

No later than 30 days after the deadline for filing the Corporate Tax return (Clause 7 of Article 2 of the Decision). The return is filed within nine months after the end of the Tax Period (Article 53 of Federal Decree-Law No. 47 of 2022): for the 2026 calendar year the return deadline is 30 September 2027 and the report deadline is 30 October 2027. For a financial year from 1 April 2026 to 31 March 2027 the report is due by 30 January 2028. The FTA may set a different date by a separate decision.

Who may issue an ISRS 4400 report for a QFZP in the UAE?

The independent external auditor that carries out the annual audit of the company’s financial statements, or any other independent auditor licensed in the UAE (Clause 1 of Article 2 of the Decision). The licensing of auditors is governed by Federal Decree-Law No. 41 of 2023, in force since 28 March 2024; an accounting or consulting firm without an auditor’s licence may not issue the report.

What happens if a QFZP does not submit the report under Decision No. 6 of 2026?

Under Clause 8 of Article 2 of the Decision the conditions of Clause 3 of Article 2 of Ministerial Decision No. 84 of 2025 and of paragraph (l) of Clause 1 of Article 2 of Ministerial Decision No. 229 of 2025 are deemed not met. The distribution income becomes non-qualifying and counts towards the de minimis threshold (5% of Revenue or AED 5,000,000, whichever is lower); while the threshold is respected, that income remains Qualifying Income under paragraph (d) of Clause 1 of Article 3 of Cabinet Decision No. 100 of 2023 and is taxed at 0%. If the threshold is breached, or on the reading that the audit condition has failed, the company loses QFZP status from the beginning of the Tax Period and for the four subsequent periods (Clause 2 of Article 5 of Decision No. 229 of 2025) and pays 9% on Taxable Income above AED 375,000. Cabinet Decision No. 75 of 2023 provides no separate penalty in dirhams for a missing report.

Is a VAT Designated Zone automatically a Free Zone for Corporate Tax?

No. A Designated Zone is a concept of the VAT Law and of Cabinet Decision No. 59 of 2017 as amended; a Free Zone for Corporate Tax is a concept of Article 1 of Federal Decree-Law No. 47 of 2022, and no separate list of such zones has been published. Under Article 1 of Cabinet Decision No. 100 of 2023 a Designated Zone for Corporate Tax purposes is a VAT Designated Zone “which has been included as a Free Zone in accordance with the Corporate Tax Law”. The FTA guide CTGFZP1 recommends confirming the status with the company’s own Free Zone Authority, and Decision No. 6 of 2026 makes that confirmation part of procedure 2(b).

Must a QFZP in JAFZA or Dubai CommerCity obtain the report if it sells only to companies in other Free Zones?

If all of the company’s income consists of transactions with Free Zone Persons that are Beneficial Recipients, it qualifies under paragraph (a) of Clause 1 of Article 3 of Cabinet Decision No. 100 of 2023 without reference to a Qualifying Activity (unless the activity is an Excluded Activity), and the company does not rely on paragraph (l). As soon as sales to mainland or foreign customers classified as distribution under paragraph (l) appear, the obligation to obtain the report arises; the safer course is to adopt the broad reading and to record the classification of income in writing.

How can a company prove that its customer is a reseller and not an end user?

With the three documents named in Clause 4 of Article 2 of the Decision: a valid licence of the customer with activities indicative of trading, wholesaling, retailing, distribution or manufacturing; a signed and dated declaration from the customer that the goods are acquired for sale, resale or donation to a public benefit entity, relating to the Tax Period; and agreements, invoices and purchase orders with the features of wholesale. The guide CTGFZP1 in Section 10.14.1 calls the same check “know your client” and gives an example: a company that buys laptops for its employees is an end user.

Do goods that are already in the UAE have to pass through a Designated Zone?

No. The condition of importation through a Designated Zone concerns only goods entering the UAE, and only where the QFZP itself imports them (paragraph (b) of Clause 3 of Article 2 of the Decision). Under Examples 84 and 85 of the guide CTGFZP1 goods bought from a manufacturer or importer in the UAE may go directly to the customer; under Example 82 goods shipped from one foreign country to another without entering the UAE are not subject to the condition.

How should the documents for the report be kept, and for how many years?

Seven years after the end of the Tax Period under Clause 1 of Article 56 of Federal Decree-Law No. 47 of 2022. Electronic copies must comply with FTA Decision No. 4 of 2026 (effective from 30 July 2026): complete and identical to the original, all pages in the original order, legible on screen, with keys and passwords provided to the FTA on request. The penalty for a record-keeping failure is AED 10,000, and AED 20,000 on repetition within 24 months.

Key Takeaways

FTA Decision No. 6 of 2026 is an annual evidentiary test of the Designated Zone QFZP distribution model. The first takeaway: the obligation falls on a QFZP engaged in the activity in paragraph (l) of Clause 1 of Article 2 of Ministerial Decision No. 229 of 2025, for every Tax Period commencing on or after 1 January 2026; companies in zones outside the list of Designated Zones, logistics providers without title to the goods and mainland companies are outside the Decision. The second: the report is prepared under ISRS 4400 by an independent auditor licensed in the UAE — the statutory auditor or any other — and contains not an opinion but facts: the results of six procedures on customers’ licences and declarations, agreements, customs and shipping documents, confirmation of the zone’s status and warehouse records. The third: the sample is calculated by a formula with a 10% margin of error, becomes a full check when the number of customers is small and is capped at roughly a hundred items when it is large, with the largest items always included. The fourth: the deadline is 30 days after the return deadline — for the 2026 calendar year, 30 October 2027. The fifth: without the report the distribution conditions are deemed not met; what follows is recharacterisation of the income, the de minimis test and the risk of losing QFZP status for five periods at 9%, or, on the conservative reading, a direct loss of status; there is no separate penalty for a missing report, but the associated penalties under Cabinet Decision No. 75 of 2023 apply. The sixth: the only way to obtain a report without exceptions is to collect customers’ licences and declarations, route imports through the Designated Zone and keep warehouse records during the period, not after it.

Companies that are still choosing a structure for distribution in the UAE should assess their customer base and import route before registering: a zone on the list of Designated Zones gives a zero rate on sales to mainland resellers but demands an audit, the report and documentary discipline. The UPPERSETUP platform for company registration helps match the zone and the company form to a specific supply model, and support for companies already operating in the UAE — tax registration, audit, reports under Decision No. 6 of 2026 and dealings with the Free Zone Authorities — is described on the page UPPERSETUP: Streamline Your UAE Business.

Summary

Federal Tax Authority Decision No. 6 of 2026 (issued 2 June 2026, published 14 July 2026, applicable to Tax Periods from 1 January 2026) obliges a Qualifying Free Zone Person (QFZP) distributing goods or materials in or from a Designated Zone to obtain an agreed-upon procedures report under ISRS 4400 from an independent auditor licensed in the UAE every year, and to submit it to the FTA no later than 30 days after the Corporate Tax return deadline (for the 2026 calendar year — by 30 October 2027). The report evidences the two conditions of paragraph (l) of Ministerial Decision No. 229 of 2025: customers resell or process the goods for sale, and goods entering the UAE are imported through a Designated Zone. The auditor performs six procedures on a sample calculated as “population ÷ (1 + population × 0.01)”, always including the largest items (10 customers → 9.1; 100 → 50; 1,000 → 90.9). Without the report the distribution conditions are deemed not met, the income becomes non-qualifying, and a breach of the de minimis threshold (5% of Revenue or AED 5,000,000) removes QFZP status for five Tax Periods, with the standard 9% rate above AED 375,000. A VAT Designated Zone (24 effective zones under Cabinet Decision No. 59 of 2017 as amended) and a Corporate Tax Free Zone are different statuses; companies in DMCC, DIFC, ADGM, IFZA and the TECOM zones cannot apply paragraph (l). Current as of September 2026.

Sources

Primary sources — UAE instruments (Federal Tax Authority, Ministry of Finance, UAE Legislation portal)

1.        Federal Tax Authority Decision No. 6 of 2026 on 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 (issued 2 June 2026; FTA unofficial translation)

2.        FTA legislation index — Corporate Tax category (issue and publication dates of instruments)

3.        Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments — Ministry of Finance consolidated text (version 13.1.26, January 2026, including Federal Decree-Law No. 28 of 2025)

4.        Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person

5.        Ministerial Decision No. 229 of 2025 on Qualifying Activities and Excluded Activities

6.        Ministerial Decision No. 84 of 2025 on Audited Financial Statements for the Purposes of Federal Decree-Law No. 47 of 2022

7.        Cabinet Decision No. 75 of 2023 on the Administrative Penalties for Violations Related to the Application of Federal Decree-Law No. 47 of 2022, and its amendments

8.        Federal Tax Authority Decision No. 4 of 2026 on the Rules and Requirements for Maintaining the Information Contained in Accounting Records and Commercial Books

9.        FTA Corporate Tax Guide “Free Zone Persons” CTGFZP1 (20 May 2024)

10.    FTA list of Designated Zones under Cabinet Decision No. 59 of 2017 and its amendments (version of 21 September 2021)

11.    FTA VAT Guide “Designated Zones” VATGDZ1

12.    Executive Regulation of Federal Decree-Law No. 8 of 2017 on Value Added Tax (Cabinet Decision No. 52 of 2017) and its amendments — FTA consolidated text of September 2026, including Cabinet Decision No. 149 of 2026

13.    Federal Decree-Law No. 47 of 2022 — record on the UAE Legislation portal

14.    Federal Decree-Law No. 41 of 2023 on Regulating the Auditing and Accounting Professions — UAE Legislation portal

15.    Cabinet Decision No. 52 of 2017 (Executive Regulation of the VAT Law) — record on the UAE Legislation portal

16.    Cabinet Decision No. 116 of 2022 on the Annual Taxable Income Subject to Corporate Tax (the AED 375,000 threshold)

17.    UAE Ministry of Finance — extension of Small Business Relief until 31 December 2029 (Ministerial Decision No. 131 of 2026)

International standards

18.    IAASB — International Standard on Related Services (ISRS) 4400 (Revised), Agreed-Upon Procedures Engagements — publication page

19.    ISRS 4400 (Revised) Agreed-Upon Procedures Engagements — text of the standard (IRBA copy, South Africa)

20.    IAASB — news release on the revision of ISRS 4400, April 2020

Professional commentary (Level 2)

21.    PwC Middle East — UAE Corporate Tax alert for QFZP distribution activities, July 2026

22.    Deloitte Middle East — FTA issues Decision No. 6 of 2026 on additional compliance requirements for QFZPs engaged in distribution activities

23.    Alvarez & Marsal — Middle East Tax Alert: UAE Corporate Tax — What the FTA’s Latest Guidance Means for Your Business, 21 July 2026

24.    Clyde & Co — Client Update: Federal Decree-Law No. 41/2023 (regulation of the auditing profession)

25.    Deloitte Middle East — Extension for UAE Corporate Tax Returns and Payment Deadlines in Specified Cases (FTA Decision No. 7 of 2024)

UPPERSETUP materials

26.    Qualifying Free Zone Person Regime in 2026: Conditions for Applying the Zero Corporate Tax Rate in the United Arab Emirates

27.    What Changed in UAE Tax Legislation from 1 April 2026

28.    DMCC in 2026: The Real Cost, Corporate Tax Risks, and the Hidden Compliance Burden

29.    JAFZA in 2026: the Jebel Ali Free Zone, Designated Zone Status, Offshore Companies and the Port

30.    Dubai CommerCity in 2026: the Complete Breakdown of Dubai’s E-Commerce Free Zone

31.    UAE Import, Customs and Import VAT in 2026

32.    UAE Commercial Agency Law 2026

33.    Customs Duties in the UAE 2026: Rates, Exemptions, and the Free Zone Regime

34.    Corporate Audit Requirements in the UAE 2026: Who Needs One, When, and Under What Rules

35.    Mandatory Electronic Invoicing in the UAE

36.    UAE Corporate Tax 2026: Rates, QFZP, Small Business Relief, Deadlines and Penalties

37.    How Companies in Free Zones Lose 0% Corporate Tax in the UAE in 2026

38.    UAE Tax Penalties, Voluntary Disclosure and Appeals in 2026

39.    Economic Substance in the UAE in 2026

40.    Mainland vs Free Zone in 2026: the New Rules That Changed Everything

41.    Transfer Pricing in the UAE 2026

A note on sources. The texts of FTA Decision No. 6 of 2026, Ministerial Decisions No. 84 and No. 229 of 2025, Cabinet Decisions No. 100 of 2023 and No. 75 of 2023, FTA Decision No. 4 of 2026, the consolidated texts of Federal Decree-Law No. 47 of 2022 and of the Executive Regulation of the VAT Law, the guide CTGFZP1 and the list of Designated Zones were read from the FTA’s official publications (unofficial translations of the FTA and the Ministry of Finance) on 10 September 2026. The dates of Decision No. 6 of 2026 — issued 2 June 2026, published by the FTA on 14 July 2026 — are taken from the FTA legislation index rather than from the dates of professional alerts (20–21 July 2026), which are sometimes mistaken for the date of issuance. The wording of the deadline in the Alvarez & Marsal alert (“30 days after the CT return is filed”) differs from the text of the Decision (“30 days following the deadline to file”); the article follows the Decision. No separate list of Free Zones for Corporate Tax purposes has been officially published, and neither has any technical procedure for submitting the report, as the article states expressly. The sampling and tax-consequence calculations are made under the formulas of the Decision and the rates of Federal Decree-Law No. 47 of 2022 for hypothetical companies. Local boutique consulting and company-formation firms and aggregators were not used as sources. All links were checked on 10 September 2026.

Disclaimer

This material is for information purposes only and does not constitute legal, tax, financial, investment or consulting advice. Before taking any decision, individual professional advice should be obtained that takes into account the specific situation, the jurisdiction, the status of the company and the current requirements of the regulators.

Current as of September 2026.