Mandatory Compliance Procedures for Qualifying Free Zone Persons engaged in Distribution Activities
(FTA Decision No. 6 of 2026)
Who are affected?
All Qualifying Free Zone Persons (QFZPs) engaged in the distribution of goods or materials in or from a Designated Zone.
What is the requirement?
An Agreed-Upon Procedures (AUP) report issued under the ISRS 4400 standard is to be submitted.
Who provides AUP report?
The independent external auditor, responsible for the annual audit of the financial statements or any other independent auditor licensed in the State.
When is it effective?
The decision applies to all tax Periods starting on or after January 1, 2026, only.
What is the deadline?
The AUP report must be submitted to the FTA within 30 days of the Corporate Tax return deadline.
What happens if you do not submit AUP report?
If the AUP report is not submitted, the condition for eligibility for the 0% Corporate Tax rate will not be met. Hence, the revenue from distribution activities would be subject to standard 9% tax rate.
What evidence is required?
- Reseller Status: You must prove that your customers are resellers who purchase your goods for onward sale or process them for resale.
- Designated Zone Entry: You must prove that all goods imported to UAE are entered through a Designated Zone.
What documents must be maintained?
- Valid business/trade/ commercial licences of customers indicating resale activity.
- Signed declarations/written confirmations from customers confirming the goods or materials are acquired for resale, or donation to a public benefit entity.
- Sales agreements, invoices, purchase orders, or other transactional records demonstrating resale.
- Import declarations, customs clearance and shipping documents evidencing entry through a Designated Zone.
What should you do? (Call to Action)
- Prepare Your Records: Ensure you are collecting signed declarations and detailed customs documents for every distribution transaction. Tax advisors may help on this.
- Appoint Your Auditor: Engage an independent licensed auditor to ensure the quality and timeliness of your AUP report.
How can we help?
We will perform the AUP as per ISRS 4400 and FTA Decision No.6 of 2026 and provide report ensuring independence, quality, and timeliness.
Who are we?
RAA Auditing is a UAE registered audit firm which has experience in the multi-jurisdictional regime, within the country, from the north of UAE at Ras Al Khaimah Economic Zone to the south at Abu Dhabi Global Market. Our teams are internationally trained, certified auditors, who bring a breadth of skills and expertise, coupled with a personalized approach and a commitment to service excellence.