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How a Dubai-based Free Zone company safeguarded its corporate tax benefits through compliance clarity and documentation discipline.
The Trade That Raised a Flag Not long ago, a Dubai-based trading company operating within a Designated Zone was preparing to ship a bulk consignment of electrical equipment to a long-standing distributor in Oman.
Everything about the deal was straightforward:
- Buyer based in Muscat.
- Goods stored and sold from the company’s JAFZA warehouse.
- Transport arranged via a third-party logistics provider.
- Invoicing aligned with the Incoterm DAP Oman.
When the company’s finance team later reviewed the customs declaration, a chill ran down their spine, "Did we just trigger a domestic supply and lose our Qualifying Free Zone Person (QFZP) status?"
Understanding the Risk - Under Ministerial Decision No. 265 of 2023, income from the distribution of goods from a Designated Zone to a foreign customer can qualify for the 0% corporate tax rate, but only if the goods don’t get routed through the mainland in a way that changes their destination or tax treatment.
The customs form was enough to raise questions.
Do we really need to look at the documents, with a magnifying glass to assess these points, and are these points important ?
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