7 July 2026 · Substance
Adequate Substance in a Free Zone
To keep QFZP status you must maintain adequate substance in the UAE: enough qualified staff, physical premises and operating expenditure to demonstrate that your core income-generating activities actually take place in the free zone. Substance can be outsourced to a related or third party in the zone if you supervise it, but a licence with no real activity behind it will not hold up under FTA review.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
The three pillars of substance
Substance is judged on real, evidenced operating presence.
- Adequate number of qualified full-time employees.
- Adequate physical premises in the free zone.
- Adequate operating expenditure for the activity.
- Core income-generating activities performed in the UAE.
When you can outsource
Substance can be delegated — but not abandoned.
- Core activities may be outsourced to a zone-based provider.
- You must adequately supervise the outsourced activity.
- The provider's substance must not be double-counted across clients.
- Keep contracts and evidence of genuine oversight.
Related guides
Frequently Asked Questions
For free zone companies evidencing substance.
How much substance is enough?
Enough for your specific activity — staff, premises and spend proportionate to the income. There is no single number; it is judged on the facts.
Can I outsource to meet the substance test?
Yes, to a provider within the free zone, provided you adequately supervise the activity and can evidence it.
Is a flexi-desk enough substance?
It depends on the activity. A minimal presence with no real staff or operations is a weak position under FTA review.
Can Exiloz assess our substance?
Yes. We benchmark your people, premises and spend against your income and flag where substance looks thin.
Prove your substance is real
Exiloz benchmarks your people, premises and spend so your QFZP substance stands up to review.