Author name: PRODIGY

UAE Corporate Tax on Qualifying Commodities: 2025 Amendments & 0% Free Zone Eligibility Guide Major Update in UAE Corporate Tax for Commodity Traders The UAE Ministry of Finance has issued two new Ministerial Decisions introducing important amendments to the definition of Qualifying Commodities UAE under the Corporate Tax regime. These updates directly impact businesses involved in: Commodity trading UAE Free Zone trading companies Industrial chemical traders Environmental commodity traders Qualifying Free Zone Persons (QFZP) The changes align UAE Corporate Tax legislation more closely with international best practices and industry standards, while preserving eligibility for the 0% Corporate Tax Free Zone UAE benefit where conditions are met. What Changed in UAE Corporate Tax on Qualifying Commodities? Removal of “Raw Form” Requirement Previously, commodities had to be in their “raw form” to qualify for the 0% Corporate Tax rate. This created limitations because many commodities undergo some level of processing before being traded. The new amendments remove the reference to “raw form”, allowing: Processed commodities to qualify Consistent tax treatment for comparable products Alignment with real trading practices This change benefits businesses engaged in metals, minerals, energy, and agricultural commodity trading in UAE. Expansion of Qualifying Commodities UAE Earlier, the definition covered only: Metals Minerals Energy commodities Agricultural commodities The updated definition now includes: Industrial chemicals Environmental commodities This expansion reflects evolving global trade markets and supports companies dealing in sustainability-linked and industrial sector commodities. Recognition of By-Products The new Ministerial Decisions clarify that by-products generated from production or extraction processes may also qualify as Qualifying Commodities. This reflects the operational realities of the commodity trading sector, where by-products form a regular and integral part of commercial transactions. Excluded Commodities – Retail Activities Not Covered The amendments confirm that commodities packaged for retail sale remain excluded. For example: Consumer-ready packaged charcoal Other retail-ready packaged products This ensures that only genuine Trading of Qualifying Commodities UAE is treated as a Qualifying Activity, while retail operations remain outside the 0% corporate tax scope. A further list of excluded products will be issued separately. Introduction of Quote Price & Related Commodity Concept Under the revised framework, a commodity may qualify if: A quoted market price exists for it, OR A quoted price exists for a related commodity These prices must be sourced from: A Recognised Commodity Exchange Market (RCEM) A recognised price reporting agency This ensures alignment with international trading practices and provides flexibility for commodity traders operating in UAE free zones. Updated Definition of Trading of Qualifying Commodities UAE The amendments clarify that Trading of Qualifying Commodities does not include activities where a Qualifying Free Zone Person primarily earns revenue from: Warehousing Logistics Inventory management This reinforces the distinction between: ✔ Genuine commodity trading✖ Support or ancillary services Businesses must carefully evaluate their revenue structure to maintain 0% Corporate Tax Free Zone UAE eligibility. Additional Important Amendments Distribution to Public Benefit Entities Where a Free Zone entity engaged in Distribution Activities sells goods to a public benefit entity, the activity is treated as a Qualifying Activity. This ensures: Continued 0% Corporate Tax eligibility No disadvantage for qualifying Free Zone businesses Expansion of “Own Account” Activities The new decisions expand the scope of treasury and financing services to related parties, allowing these activities to be conducted for the taxpayer’s own account. This aligns with the Corporate Tax Guide for Free Zone Persons and provides greater operational flexibility. Retrospective Application – Effective from 1 June 2023 The new Ministerial Decisions apply retrospectively to tax periods beginning on or after 1 June 2023. Businesses should immediately: Reassess previously classified non-qualifying commodities Determine whether reclassification is required Submit voluntary disclosures where applicable Apply for penalty waivers if incorrect returns were filed Proactive compliance is critical to mitigate tax exposure. Why This Corporate Tax Update Matters for UAE Free Zone Businesses These amendments create both: Opportunities for broader 0% eligibilityCompliance risks if not properly assessed Companies engaged in Commodity Trading Corporate Tax UAE must ensure: Proper classification of commodities Clear documentation of quoted pricing Revenue segregation between trading and support functions Full compliance with UAE Corporate Tax regulations Corporate Tax Advisory Services – Prodigy Group UAE At Prodigy Group UAE, we assist businesses with: UAE Corporate Tax compliance Free Zone eligibility assessment Qualifying Commodities evaluation Corporate Tax registration and filing Voluntary disclosures and penalty waiver support Corporate Tax advisory UAE If your company operates in commodity trading or Free Zone activities, now is the time to review your tax position under the updated legislation. 📞 Contact Prodigy Group UAE today for expert guidance on UAE Corporate Tax on Qualifying Commodities. FAQ’s What is a qualifying free zone person in UAE corporate tax? As per the corporate tax legislation, a Qualifying Free Zone Person (QFZP) is a company operating within a Free Zone (entitled to a 0% tax rate) maintaining its tax-exempt status as per the governing laws of that zone Can you own 100% of a company in the UAE? Investors of all nationalities can establish and fully own companies in the UAE Is Dubai 100% tax free? Dubai is an emirate inside the UAE, not a separate country. For a salaried employee, the everyday answer to “is dubai tax free” is yes for personal income. Salary does not get taxed. Life, however, includes VAT, small municipality fees on hotel stays or utilities, and a federal corporate tax framework for businesses. How much does LLC cost in the UAE? AED 15,000 to AED 40,000 The cost of starting an LLC in Dubai typically ranges from AED 15,000 to AED 40,000, depending on the business activity, number of visas required, office space, and government approvals What are the three types of business licenses in the UAE? The UAE economic department issues the licenses and the procedures of license issuance varies from one emirate to another. The three major types of licenses in the UAE are commercial, industrial and professional. But the government also issues various other licenses as well that are specific to certain activities. What is the minimum amount to start a business