7 July 2026 · Disqualification
Losing QFZP Status
Failing any QFZP condition — breaching the de minimis limit, lacking adequate substance, earning excluded income beyond the limits, or electing the standard regime — removes the 0% rate. The consequence is severe: the entire entity is taxed at 9% for that tax period, and the disqualification generally continues for the following four tax periods. That is why QFZP status needs continuous monitoring, not a once-a-year check.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
What breaks the 0% rate
A single breach is enough — the conditions are cumulative.
- Non-qualifying revenue over the de minimis limit.
- Inadequate substance for the activity.
- Excluded income outside the permitted limits.
- Electing to be taxed under the standard 9% regime.
Why it hurts for years
Disqualification is not a one-year problem.
- All income is taxed at 9% for the breach period.
- The exclusion generally applies for the following four periods.
- Retroactive review is possible where substance was never real.
- Clean records are your defence and your route back.
Related guides
Frequently Asked Questions
For free zone companies worried about a breach.
What happens if I lose QFZP status?
Your whole entity is taxed at 9% for that period, and the disqualification generally continues for the next four tax periods.
Can I get QFZP status back?
You must satisfy all conditions again after the exclusion period. Strong records and corrected processes are essential.
Is it just the excess that is taxed?
No. Unlike a simple adjustment, losing QFZP status taxes all of the entity's income at 9%, not only the offending amount.
Can Exiloz help us stay qualified?
Yes. We monitor your conditions, flag breaches early and help you rebuild QFZP status if it is lost.
Do not lose your 0% rate by accident
Exiloz monitors your QFZP conditions and catches a breach before it costs you the year.