FTA Decision No. 6 of 2026 introduces an additional reporting requirement for certain Qualifying Free Zone Persons distributing goods or materials in or from a Designated Zone. Affected businesses must obtain an agreed-upon procedures report from an independent UAE-licensed auditor and submit it to the Federal Tax Authority.
The requirement applies to Tax Periods commencing on or after 1 January 2026. It does not apply to every Free Zone company or trading business. Scope depends on the activity, location, customers, import arrangements and supporting records.
This article outlines the evidence, auditor procedures, sampling rules, deadlines, consequences and readiness controls affected distributors should review.
What FTA Decision No. 6 of 2026 Changes
Ministerial Decision No. 84 of 2025 requires every Qualifying Free Zone Person to prepare and maintain audited financial statements. It also requires affected Designated Zone distributors to comply with additional procedures prescribed by the FTA.
FTA Decision No. 6 of 2026 defines those procedures. The report may be prepared by:
- The independent auditor responsible for the annual financial statement audit
- Another independent auditor licensed in the UAE
The report is separate from audited financial statements. Under ISRS 4400, the auditor performs the prescribed work and reports factual findings rather than an audit opinion, assurance conclusion, tax clearance or confirmation of QFZP status.
The company should assess how the findings affect its Corporate Tax position.
Which Free Zone Distributors Are Affected?
Ministerial Decision No. 229 of 2025 treats distribution of goods or materials in or from a Designated Zone as a Qualifying Activity where the required conditions are met.
The activity covers buying and selling tangible or movable goods and may include importing, storing, handling, transporting and exporting them.
The conditions require:
- The activity to be conducted in or from a Designated Zone
- Goods entering the UAE to be imported through a Designated Zone
- Supply to customers that resell, process or alter the goods for sale or resale, or supply to a public benefit entity
A Free Zone licence alone does not establish eligibility. The location, customer role, importer and movement of goods must support the Corporate Tax treatment.
Importer-of-record, drop-shipment and third-party customs arrangements require factual review. Businesses should confirm which entity imports the goods, where they enter the UAE and whether the structure supports the wider Qualifying Free Zone Person requirements.
What Must the Agreed-Upon Procedures Report Verify?
The prescribed procedures focus on two conditions:
| Evidence test | Position to be supported |
| Customer reseller or processor status | The customer resells the goods or processes or alters them for sale or resale |
| Designated Zone importation | Goods entering the UAE, where imported by the QFZP, entered through a legally recognised Designated Zone |
A licence may indicate a trading or manufacturing activity but not how goods were used in a transaction. Accounting records may record an import value without proving where the goods entered the UAE.
Licences, declarations, agreements, customs documents and internal records should therefore support one consistent position.
Ministerial Decision No. 229 of 2025 also covers supply to a public benefit entity. FTA Decision No. 6 of 2026 permits declarations supporting acquisition for donation to such an entity. However, the six prescribed procedures are framed primarily around reseller or processor status and Designated Zone importation. The treatment of these transactions should be confirmed with the appointed auditor.
Evidence Required for Customer Reseller or Processor Status
The company must retain documents demonstrating that relevant customers qualify as resellers or processors, including:
- Valid business, trade or commercial licences
- Signed customer declarations or written confirmations
- Executed sales agreements
- Invoices, purchase orders and other transaction records
Declarations selected for review must be signed, dated and linked to the relevant Tax Period. An earlier declaration should not automatically be used for a later period.
The auditor will also consider whether agreements contain terms supporting resale, processing or onward supply. These are supporting indicators rather than mandatory features.
A finance ledger may show the customer and invoice value but not whether the buyer resold or processed the goods. That evidence may sit with sales or in customer onboarding records.
Where goods are acquired for donation to a public benefit entity, the company should retain written confirmation supporting the intended use for the relevant transaction and Tax Period. The auditor treatment should be agreed separately.
Evidence Required for Designated Zone Importation
Where the QFZP imports goods entering the UAE, it must maintain a traceable import record, including:
- Import declarations, permits and customs clearance documents
- Bills of lading, airway bills and equivalent transport records
- Confirmation from the relevant Free Zone Authority that the location is legally recognised as a Designated Zone
- Inventory, warehousing, goods movement and logistics records
Product descriptions, quantities, dates and locations should align across customs, shipping, inventory and accounting systems.
Later movement into a Designated Zone should not be assumed to correct the original import route. This is a practical implication rather than an express rule.
Six Prescribed Auditor Procedures
To test the customer and import conditions consistently, FTA Decision No. 6 of 2026 prescribes six procedures linking specific business records to the factual findings reported by the auditor.
| Procedure | Main records reviewed | Factual finding reported |
| Customer licence inspection | Trade, business or commercial licences | Whether the licensed activities are consistent with reselling |
| Customer declaration verification | Signed and dated customer declarations | Whether reseller status is affirmed for the relevant Tax Period |
| Sales agreement review | Agreements, invoices and transaction records | Whether the records support resale, processing or onward supply |
| Import document inspection | Customs declarations, permits, contracts and shipping documents | Whether goods entered through a Designated Zone |
| Designated Zone confirmation | Legal designation and authority confirmation | Whether the location is officially recognised as a Designated Zone |
| Internal record inspection | Inventory, warehousing and logistics records | Whether internal records support the importation position |
Each procedure must describe the evidence obtained, timing and extent of work, and related factual findings. Details of selected samples should be included in an appendix.
How Is the Sample Size Determined?
The prescribed sample is calculated using:
Sample Size = Sample Population ÷ [1 + Sample Population × (Margin of Error)²]
The Margin of Error is 10%.
The relevant populations are:
- Total customers for the licence review
- Total customers for the declaration review
- Total sales agreements for the transaction review
- Total relevant imports for the import procedures
Each sample must include the highest-value customers, agreements or imports. One sample should not be assumed to cover every procedure.
Complete populations are required before selection. Sampling for other documents should be agreed with the appointed auditor.
Applicable Tax Periods and Report Deadline
The Decision applies to Tax Periods commencing on or after 1 January 2026. The Tax Period start date determines applicability, not the year in which the Corporate Tax return is filed.
For example:
- A calendar-year Tax Period beginning on 1 January 2026 falls within the Decision.
- A Tax Period beginning on 1 July 2025 and ending on 30 June 2026 commenced before the application date.
The report is due no later than 30 days after the statutory Corporate Tax return deadline, unless the FTA sets another date. It is not calculated from an early filing date.
For a calendar-year Tax Period ending on 31 December 2026, the return would ordinarily be due on 30 September 2027 and the AUP report by 30 October 2027, unless another date applies.
The 30-day period may be too narrow to start from scratch. Businesses should reconcile populations, collect documents and engage the auditor earlier.
Consequences of Not Submitting the Report
Failure to submit the report causes the specified conditions under Ministerial Decision No. 84 of 2025 and the relevant distribution conditions under Ministerial Decision No. 229 of 2025 to be treated as unmet.
A business failing the applicable QFZP conditions ceases to be a Qualifying Free Zone Person from the beginning of the relevant Tax Period and for the following four Tax Periods.
The impact may extend beyond sampled transactions and affect the wider QFZP position and application of the 0% Corporate Tax rate to Qualifying Income. This five-Tax-Period consequence is not a separate fixed penalty.
Readiness Checklist for UAE Free Zone Distributors
Affected businesses should review the following areas before filing and AUP reporting begin:
- Confirm scope: Determine whether the company conducts the relevant Qualifying Distribution Activity in or from a Designated Zone.
- Map customer status: Separate resellers, processors, end users and public benefit entity transactions.
- Update customer evidence: Obtain current trade licences and Tax-Period-specific declarations.
- Review transaction records: Confirm whether agreements, invoices and purchase orders support the commercial model.
- Map import flows: Identify the importer, customs entry point and Designated Zone status for each material route.
- Reconcile records: Align customs, shipping, warehousing, inventory and accounting information.
- Prepare complete populations: Produce reliable customer, agreement and import listings, including highest-value transactions.
- Engage the auditor early: Allow time for sample selection, evidence requests and factual exceptions before submission.
The report tests records and declarations relating to the relevant Tax Period. Evidence controls should operate while transactions are processed rather than being assembled after the return is complete.
Conclusion
FTA Decision No. 6 of 2026 makes evidence quality a direct part of the compliance position for affected UAE Free Zone distributors.
Customer status and import routes must be supported by records relating to the relevant Tax Period. Businesses should confirm whether the Decision applies, prepare complete populations and resolve gaps before auditor testing begins.
The AUP report is one requirement within the wider QFZP framework. The final Corporate Tax position depends on the company’s activities, income, transaction facts and compliance with all applicable conditions.
About SimplySolved
As an FTA Approved Tax Agency with ISO 9001, ISO 27001 and ISO 42001 certifications, SimplySolved provides Corporate Tax advisory services for UAE businesses.
SimplySolved supports UAE Free Zone businesses with QFZP eligibility reviews, Qualifying Income assessments, Corporate Tax filing and documentation readiness. Support may include reviewing customer evidence, Designated Zone import records and transaction populations, and identifying inconsistencies across operational records.
Partner with SimplySolved to review whether customer evidence, import records and Corporate Tax documentation support the company’s QFZP position.
This summary is provided for general informational purposes only and should not be relied upon as binding advice regarding financial, accounting, or tax obligations. Professional guidance should be sought based on the specific circumstances of each business.
