Qualifying Free Zone Persons that rely on distribution of goods or materials in or from a Designated Zone must now obtain an agreed-upon procedures report from an independent UAE-licensed auditor, prepared under ISRS 4400, and file it with the Federal Tax Authority within 30 days of submitting the corporate tax return. It applies to tax periods commencing on or after 1 January 2026 — so for calendar-year companies, this year.
Why FTA Decision 6 exists
Distribution has always been the awkward qualifying activity. The 0% rate is conditional on goods actually moving in or from a Designated Zone in the way the rules contemplate, and that is a factual question about logistics rather than a legal question about structure.
Self-assessment does not test factual questions well. A company can hold an honest belief that its distribution model qualifies while the paperwork tells a different story — goods that never physically entered the zone, or a flow that looks like onward domestic sale rather than qualifying distribution.
The decision addresses that by putting an independent party between the assertion and the claim. It does not change what qualifies. It changes who has looked at whether you meet it, and when.
What an agreed-upon procedures report actually is
Worth being precise, because the phrase gets used loosely and the distinction matters both to your expectations and to the fee.
An ISRS 4400 engagement is factual findings. The auditor performs a specified list of procedures — inspect these documents, agree these figures, confirm these movements — and reports what was found. No opinion is expressed. No assurance is given.
That differs from the two things people assume it is:
- Not an audit. An audit gives reasonable assurance and an opinion on financial statements as a whole. This does neither.
- Not a review. A review gives limited assurance in a negative form. This gives none.
The practical consequence is that responsibility does not transfer. The report evidences that defined checks were performed and records the result. Meeting the underlying conditions remains entirely yours. A company that reads the report as a clearance certificate has misunderstood what it bought.
It also means the engagement is narrower and cheaper than an audit — but it is a separate engagement, and it does not come free with your statutory audit.
The 30-day window is the part that catches people
The deadline runs from filing the corporate tax return, not from your year end.
That sounds convenient and is the opposite. Most companies file close to their nine-month deadline. If you file on 30 September, your AUP report is due by 30 October — and by then your auditor is dealing with everyone else who left the return late.
Worse, the engagement cannot sensibly start after the return is filed. The procedures test the same underlying records the return was prepared from, so the sensible sequence is to run them alongside the tax computation, not after it.
The schedule that works:
- Year end plus 6 weeks: books closed, distribution flows documented.
- Year end plus 3 months: engage the auditor for the AUP work and agree the procedure list.
- Alongside the tax computation: fieldwork, so findings can inform the return rather than contradict it.
- Return filed: report already drafted.
- Within 30 days: report submitted, comfortably.
What the auditor will ask for
The specific procedures follow the decision, but the evidence base is predictable. Assemble it before the engagement and the work is quick.
- Documentation of the physical goods flow — where goods entered, where they were stored, where they went. This is the heart of it.
- Customs and import records evidencing movement in and out of the Designated Zone.
- Warehousing records, including third-party storage arrangements if you do not hold your own facility.
- Sales invoices and contracts showing who bought, where they are established, and on what terms.
- The revenue split between qualifying and non-qualifying income, with the de minimis calculation.
- Related-party arrangements in the distribution chain, with transfer pricing support.
The one that most often does not exist in usable form is the physical goods flow. Companies know what happened; they cannot always evidence it two years later. If your records rely on somebody remembering, fix that now.
What is actually at risk
Missing the report is not a filing penalty. The FTA may treat the relevant income as non-qualifying — which means 9% applies to income you had budgeted at 0%.
Work the arithmetic. A distributor with AED 8 million of qualifying income taxed at 0% has nothing to pay. The same income treated as non-qualifying attracts 9% above the AED 375,000 threshold — roughly AED 686,000. That is the cost of a 30-day administrative deadline.
And it sits on top of the existing QFZP conditions, all of which still apply: adequate substance, income within qualifying categories, non-qualifying revenue inside the de minimis limit, transfer pricing compliance and audited financial statements. This decision adds a requirement; it removes none. We work through the full set in the QFZP guide.
If your 0% position rests on distribution, treat the AUP report as part of the cost of that position rather than as an optional extra — and diarise it now, because the first deadlines under this decision fall this year.
Do you need an AUP report this year?
We are licensed to practise in the UAE and can perform the ISRS 4400 engagement alongside your audit and tax filing, so the sequencing works.
Frequently asked questions
A decision setting additional compliance requirements for Qualifying Free Zone Persons carrying on the qualifying activity of distributing goods or materials in or from a Designated Zone. Those businesses must obtain an agreed-upon procedures report from an independent UAE-licensed auditor and submit it to the Federal Tax Authority.
Qualifying Free Zone Persons relying on distribution of goods or materials in or from a Designated Zone as a qualifying activity. If your 0% position rests on distribution, it applies. If your qualifying income comes from other activities entirely, it does not — but confirm which category your revenue actually falls into rather than assuming.
The requirement applies to tax periods commencing on or after 1 January 2026, and the report must reach the FTA no later than 30 days after the corporate tax return is filed. That 30-day window is the detail companies miss — it runs from filing, not from year end, so a late return compresses nothing but a late report costs you the rate.
A factual-findings engagement, not an audit opinion and not limited assurance. The auditor performs a defined list of procedures and reports exactly what was found, without expressing a conclusion. The responsibility for actually meeting the conditions stays with you — the report evidences the checking, it does not certify the outcome.
The FTA may treat the relevant income as non-qualifying, which means the standard 9% rate applies to it. For a distributor with meaningful margin, missing a 30-day administrative deadline can therefore cost 9% of the income the report was meant to protect.
