De minimis requirements: what it means in UAE tax.

What de minimis requirements means

Also called: De minimis test, De minimis rule.

The de minimis requirements are a tolerance limit for free zone companies. A Qualifying Free Zone Person may earn a small amount of revenue that does not qualify for the 0% rate without losing its status, provided that revenue stays within the limit.

The limit is set in Ministerial Decision No. 229 of 2025: non-qualifying revenue in a tax period must not exceed 5% of total revenue or AED 5,000,000, whichever is lower. For most SMEs the 5% figure is the one that bites, because the AED 5,000,000 cap only becomes lower once total revenue passes AED 100,000,000.

The stakes are high. Meeting the limit is a condition of Qualifying Free Zone Person status, so going over it by even a small amount can mean the whole business is taxed at the standard rates for that tax period and the four that follow. It is a test to monitor during the year, not only at year end.

How it works

• Non-qualifying revenue is revenue from Excluded Activities, from non-qualifying activities with mainland customers, and from free zone customers who are not the Beneficial Recipient.
• Total revenue is all revenue of the Qualifying Free Zone Person in the tax period.
• Some revenue is left out of both figures: revenue of a domestic or foreign permanent establishment, certain free zone property income, and most intellectual property income.
• The test uses revenue, the gross amount of income, not profit.
• If the test is met, the small non-qualifying amount is treated as Qualifying Income. If it is failed, Qualifying Free Zone Person status is lost.

Worked example

A free zone electronics distributor has gross revenue of AED 12,450,000. That includes AED 450,000 rent from letting spare commercial space in the free zone to a mainland company, which is taxed at 9% but left out of the de minimis calculation. It also made AED 700,000 of sales to walk-in retail customers, which count as non-qualifying revenue.

Gross revenue	AED 12,450,000
Less rent from mainland tenant (outside the test)	AED 450,000
Total revenue for the test	AED 12,000,000
5% of total revenue	AED 600,000
Fixed cap	AED 5,000,000
De minimis limit (the lower figure)	AED 600,000
Non-qualifying revenue	AED 700,000
Amount over the limit	AED 100,000

Retail sales of AED 100,000 more than the limit are enough to fail the test and put Qualifying Free Zone Person status at risk.

Common mistakes

• Measuring non-qualifying profit instead of non-qualifying revenue. The test is on gross revenue.
• Checking the percentage only at year end. By then it is too late to restructure sales channels.
• Leaving permanent establishment or excluded property revenue inside the calculation, which distorts both sides of the test.

The law

• Cabinet Decision No. 100 of 2023, Article 4 (de minimis requirements) and Article 3, Clause 1, paragraph (d)
• Ministerial Decision No. 229 of 2025, Article 3 (5% or AED 5,000,000, whichever is lower) and Article 5 (condition of status)
• Federal Decree-Law No. 47 of 2022, as amended, Article 1 (definition of Revenue)

Frequently asked questions

At what revenue does the AED 5,000,000 cap start to matter?

Above total revenue of AED 100,000,000. Below that, 5% of total revenue is always the lower figure, so the 5% limit is the one to watch.

Is non-qualifying revenue within the limit taxed at 9%?

No. When the de minimis requirements are met, Cabinet Decision No. 100 of 2023 lets that other income count as Qualifying Income. Income that is specifically taxed at 9%, such as permanent establishment income, stays taxable.

Related terms

Qualifying Free Zone Person · Qualifying Income · Exempt income. See every term in the UAE tax glossary.

For the full picture, read our guide: Qualifying Free Zone Persons: How the 0% Corporate Tax Rate Really Works.

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