Key Highlights

• UAE removes “raw form” restriction, allowing Free Zone businesses to trade metals, industrial chemicals, energy commodities, and agricultural products with associated by-products.
• New regulations recognize self-investment activities as qualifying for preferential tax treatment, whether for related parties or the taxpayer’s own financial operations.
• The ministry establishes an official list of recognized price reporting agencies, providing businesses with definitive pricing standards and reducing regulatory uncertainty.

The UAE Ministry of Finance has introduced significant updates to Free Zone tax regulations, implementing new rules that expand business opportunities while maintaining the country’s competitive tax framework. 

These changes demonstrate the UAE’s ongoing commitment to supporting international businesses and strengthening its position as a premier global business destination.

Key Regulatory Changes

The Ministry of Finance has formally repealed Ministerial Decision No. 265 of 2023, introducing Ministerial Decision No. 229 of 2025, focused on Qualifying Activities and Excluded Activities. This updated framework provides greater clarity regarding the scope of activities that qualify for preferential corporate tax treatment within free zones.

Expanded Commodity Trading Opportunities

The revised regulations significantly broaden the definition of qualifying commodity trading beyond its previous limitations. Previously, commodities could only be traded “in raw form,” but the new framework removes this restriction entirely.

Under the updated rules, businesses can now engage in trading activities involving:

• Metals and minerals
• Industrial chemicals and their associated by-products
• Energy commodities
• Agricultural products
• Environmental commodities

The critical requirement is that these commodities must have a Quoted Price – defined as pricing established by either a recognized commodity exchange market or a recognized price reporting agency designated by the minister.

Enhanced Treasury and Financing Services

The new regulations provide important clarifications for treasury and financing services, particularly regarding related party transactions. A notable advancement is the recognition of self-investment activities as qualifying activities, whether conducted for related parties or for the taxpayer’s own financial account.

Additional Regulatory Framework

Alongside Decision No. 229, the Ministry has issued Ministerial Decision No. 230 of 2025, which establishes the Specification of Recognized Price Reporting Agencies. This decision provides businesses with a clear list of recognized pricing agencies, eliminating uncertainty and enabling more straightforward compliance with the new trading requirements.

Distribution and Public Benefit Considerations

The updated framework includes provisions for businesses involved in the distribution of goods or materials within Designated Zones. Companies can now conduct transactions with public benefit entities without these activities affecting the de minimis threshold calculations.

Strategic Economic Impact

According to the Ministry of Finance, these regulatory updates underscore the fundamental role free zones play in driving the UAE’s economic expansion. The ministry emphasized that free zones continue to be essential for attracting international investment and creating an environment conducive to business growth.

The ministry stated that these new decisions “reflect the importance of free zones and their role in the country’s economic diversification strategy, as well as the UAE’s commitment to providing a supportive business environment in alignment with international tax standards.”

Reinforcing Global Competitiveness

These regulatory enhancements further strengthen the UAE’s competitive corporate tax regime. By combining preferential tax treatment for qualifying activities with these expanded opportunities, the UAE continues to reinforce its status as a leading international hub for business and investment.

The ministry highlighted that these changes support the nation’s sustainable development agenda while maintaining alignment with international tax compliance standards.

Implications for Businesses

For companies operating within UAE Free Zones, these changes present several advantages:

Expanded Trading Flexibility: The removal of “raw form” restrictions opens new possibilities for value-added commodity trading activities.

Enhanced Financial Services: Clearer guidelines for treasury and financing services provide greater operational certainty.

Improved Compliance Framework: The specification of recognized pricing agencies reduces regulatory ambiguity and supports more efficient business operations.

Strategic Planning Benefits: These updates allow businesses to develop more comprehensive strategies that leverage the UAE’s preferential tax treatment while meeting international compliance requirements.

These regulatory updates represent the UAE’s continued evolution as a business-friendly jurisdiction, demonstrating the government’s responsiveness to market needs while maintaining robust tax frameworks that support both local economic development and international business growth.

Final Word

For businesses looking to establish or expand their Free Zone operations under these enhanced regulations, JSB Incorporation provides comprehensive support in navigating the updated tax framework and ensuring compliance with the new requirements. Our expertise in UAE business formation can help maximize the benefits of these regulatory improvements.