FTA Decision No. 6 of 2026 – Designated Zone

July 17, 2026

Additional Procedures for Distribution of Goods or Materials in or from a Designated Zone

The UAE Federal Tax Authority has issued FTA Decision No. 6 of 2026, prescribing additional procedures that Qualifying Free Zone Persons (QFZPs) engaged in the distribution of goods or materials in or from a Designated Zone must follow when supplying goods to customers outside a Free Zone.

The Decision requires affected businesses to maintain prescribed supporting documentation and obtain an agreed-upon procedures (AUP) report from an independent external auditor. This Decision Applies to Tax Periods commencing on or after 1 January 2026. Businesses should therefore review their transaction flows, customer classifications, import routes, and supporting documentation throughout the Tax Period, rather than waiting until the Corporate Tax (“CT”) return is due. The key provisions of the Decision are summarised below.

Additional Procedures for Distribution Activities in a Designated Zone

A QFZP doing distribution activity must get an AUP report either from the independent external auditor who does its annual financial statement audit, or from any other independent auditor licensed in the UAE.

Standard to follow: The AUP report must be prepared under ISRS 4400 (the international standard on related services, AUP engagements issued by IAASB), and any applicable UAE auditing rules.
The AUP report shall document the procedures performed and the related findings that shall demonstrate:
- That the QFZP sells goods or materials to customers who resell them or resell parts of such goods/materials, or processor alter them for sale or resale, and
- That any goods or materials the QFZP imports into the UAE are imported through a Designated Zone.
Supporting documents that demonstrates that the customers qualify as resellers:
The QFZP needs to maintain the following:
- Valid trade/business/commercial licences (or equivalent) showing the customer is a reseller,
- Signed declarations from customers confirming they’re buying for resale or donation to a public benefit entity,
- Sales agreements, invoices, purchase orders, or other records showing resale activity.
Supporting documentation evidencing the import of goods or materials through a Designated Zone
- Import declarations and customs clearance paperwork showing lawful entry through a Designated Zone,
- Shipping docs (bill of lading, airway bill, etc.) indicating entry through a Designated Zone.
What the report must contain: In accordance with ISRS 4400, the AUP report should document the procedures performed by the independent external auditor and the factual findings resulting from those procedures.
Deadline: The AUP report must be submitted to the FTA within 30 days of the CT return filing deadline for that Tax Period or such other date the FTA determines.
Consequence of failure: If the QFZP doesn’t submit the report on time, then it’s treated as not having met the conditions in Clause 3 Article 2 of Ministerial Decision 84 of 2025 (Audited Financial Statements) and paragraph (l), Clause 1, Article 2 of Ministerial Decision 229 of 2025 (Qualifying Activities and Excluded Activities), shall not be considered to be met.

The Procedures for Verifying Reseller Status and Designated Zone Importation

Verification of Trade License, Customer Declarations and Sales Agreements

Trade licence inspection: Obtain and inspect a sample of customer trade/business licences and check whether the listed activities (trading, wholesaling, retailing, distributing, manufacturing, etc.) support that they’re reselling the goods. A report has to be prepared confirming whether the required declarations are available and whether they confirm that the customer is a reseller of the goods or materials, in whole or in part.
Customer declarations: Obtain a sample of signed customer declarations, check if such declarations actually affirm their status as resellers, and confirm that the declarations are signed, dated, and relate to the relevant Tax Period. The report should confirm whether the supporting documentation for each sample demonstrates that the goods were imported through a Designated Zone.
Sales agreements/records: Select a sample of sales agreements, invoices, or related transaction records issued by QFZP, and look for features that indicate resale activity (bulk quantities, resale conditions, pricing structures). The finding must state whether the customer either resells the goods, or processes or alters them for sale or resale.

Inspection of Import Documentation

Import documentation: Inspect sample customs declarations, import permits, sales contracts, and bills of lading to confirm goods entered through a Designated Zone. The AUP should include whether the documentation for each sample confirms that importation occurred through a Designated Zone.
Confirmation of Designated Zone status: For the sampled imports, confirm the actual Free Zone/port/area is officially recognized as a “Designated Zone” under applicable Cabinet Decisions or any other legislations. This should be confirmed by the relevant Free Zone Authority.
Internal records: Check inventory logs, warehousing reports, goods movement records, and logistics documentation to confirm goods were received/handled/stored in a Designated Zone before distribution. Findings should include report on the internal records evidencing importation through a Designated Zone.

Other Considerations:

For any documents not covered above, the QFZP and auditor can agree on a sampling approach together, based on the same principles in Article 3.
Every procedure in the report needs to be accompanied by a description of the evidence obtained, timing, and extent of work, and the factual findings, and sample details should be included in appendix.
If the wording of a procedure is changed without changing its substance requirements, that change should be included in an appendix.

Key Takeaway

The Decision places greater responsibility on taxpayers to demonstrate that they satisfy the conditions for the 0% CT rate. This now extends beyond maintaining records and includes obtaining an AUP report from an independent external auditor.
While the objective is to strengthen compliance, businesses should be prepared for the additional time, cost, and administrative effort involved in gathering documentation and coordinating with external auditors.
Customer declarations alone will no longer be sufficient. Businesses will need to maintain a comprehensive audit trail, including trade licences, sales agreements, import documentation, customs records, and internal logistics records to substantiate their eligibility for meeting end user declaration condition for distribution activity
The UAE CT regime is built on the principle of self-assessment, under which taxpayers determine and report their tax position, while the FTA retains the power to review and audit those positions where necessary. The new requirements suggest a greater reliance on independent auditor findings as part of the compliance process.
QFZP engaged in distribution activities will face increased compliance challenges due to the additional requirements. These include maintaining adequate substance, obtaining and validating end-user declarations, substantiating that income is derived from resellers, and obtaining an AUP report from an external auditor to support compliance and transfer pricing requirements. Only upon fulfilment of all prescribed conditions, such Free Zone Persons will be eligible to be treated as QFZPs.