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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% eligibility
Compliance 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
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
Investors of all nationalities can establish and fully own companies in the UAE
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.
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
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.
The minimum capital requirement varies by free zone but typically starts from AED 50,000 (approximately USD 13,600). Certain free zones may offer packages with no mandatory capital deposit, though some sectors require higher amounts depending on the business activity.
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