Bookkeeping
Bookkeeping for Free Zone Companies in the UAE
We keep free zone books the way the 0% Corporate Tax rate needs them: income tagged by type every month, not sorted out at year-end.
- Qualifying and non-qualifying income tagged as it is booked
- The de minimis position tracked monthly, not discovered in the return
- Books ready for the audited statements a QFZP needs
Who this is for
- You claim the 0% rateAnd want to know the books will back it up.
- You sell to mainland customersSo some of your income may not qualify.
- Your free zone wants audited accountsAnd the auditor keeps sending queries back.
- You run more than one activityAnd they all land in one sales account.
What is included
- Monthly bookkeeping with an income-type tag on every revenue line
- A running de minimis check against the 5% and AED 5 million limits
- Related-party transactions recorded separately for transfer pricing
- VAT treatment checked, including designated zone supplies
- Fixed asset and lease records kept to audit standard
- Year-end files handed to your auditor in the order they ask for
Why free zone books are different
A Qualifying Free Zone Person pays 0% Corporate Tax on qualifying income. That rate is not automatic. It depends on conditions that are tested from the books.
Under Article 18 of the Corporate Tax Law, a QFZP must keep adequate substance in the free zone, derive qualifying income, meet the de minimis requirement and prepare audited financial statements. Ministerial Decision No. 84 of 2025 confirms that audited statements are required for a QFZP whatever its revenue.
The de minimis test is the one bookkeeping decides. Non-qualifying revenue in a tax period must not exceed the lower of 5% of total revenue or AED 5 million. Fail it, and the company stops being a QFZP from the start of that tax period and for the following four.
Five years at the 9% rate on taxable income above AED 375,000. All because one sales account mixed two kinds of income.
A worked example
A free zone company has total revenue of AED 8,000,000. AED 350,000 of it comes from services to mainland customers that do not qualify.
The limit is the lower of 5% of AED 8,000,000, which is AED 400,000, and AED 5,000,000. So the limit is AED 400,000. At AED 350,000 the company passes, with AED 50,000 of room.
Now suppose AED 100,000 of mainland work was booked to the general sales account and only surfaces at year-end. Non-qualifying revenue becomes AED 450,000. That is over the limit, and the 0% rate is gone for five periods.
Tagging each invoice when it is booked turns that year-end surprise into a monthly number you can manage.
How we set up the chart of accounts
- One revenue account per income stream, named by where the customer sits
- A separate account for income from related parties
- Designated zone supplies kept apart, because their VAT treatment differs
- A monthly report showing non-qualifying revenue against the limit
The mistake we see most
One revenue account for everything.
It is the default in most software, and it makes the qualifying income schedule a year-end archaeology project. A separate account, or a tag, per income stream costs nothing to set up in month one.
How it works
- Map your incomeWe list every revenue stream and where its customers sit.
- Free reviewWe check last year's split and where the de minimis position stands.
- Fixed monthly quoteBased on volume and the number of income streams.
- Monthly close with the splitEach close pack shows qualifying and non-qualifying income.
Bookkeeping for Free Zone Companies in the UAE — questions we get asked
Do free zone companies need bookkeeping?
Yes. Every free zone company must register for Corporate Tax and file a return, and a QFZP must also prepare audited financial statements. Neither is possible without kept books.
What is the de minimis rule?
Non-qualifying revenue in a tax period must not exceed the lower of 5% of total revenue or AED 5 million. Above that, QFZP status is lost for that period and the next four.
Can a QFZP use Small Business Relief?
No. Small Business Relief and the QFZP regime cannot be combined, so a QFZP keeps full books and audited statements regardless of size.
Which free zones do you work with?
Any UAE free zone. The Corporate Tax rules are federal; what differs by zone is the authority's own licence and audit requirements, which we check for your zone.
Do you work with the free zone's auditor?
Yes. We prepare the year-end files and answer the auditor's queries, so the audit is not run through you.
Do you also file the free zone Corporate Tax return?
Yes, through our corporate tax filing service, built from the same books.
Book your free compliance review
Fifteen minutes, no charge, and you leave with a written summary of where you stand whether or not you engage us.
