Introduction

On 3 September 2025, Ministry of Finance (“MoF”) released Ministerial Decision No. 229 of 2025 relating to the Qualifying Activities and Excluded Activities under the Qualifying Free Zone Person (“QFZP”) regime under the United Arab Emirates (“UAE”) Corporate Tax Law (Federal Decree Law No.47 of 2022).

Trading of Qualifying Commodities update

This release presents a significant change to the previous rules primarily around the definition of Qualifying Commodities under the “Trading of Qualifying Commodities” Qualifying Activity. This comes as a welcome update for impacted businesses, keeping the UAE as a leading hub for commodity trading.

Importantly, this Decision is retrospective, applying from the inception of the UAE CT Law (i.e. 1 June 2023). It comes just in time before the majority of businesses are required to file their first CT Returns at the end of this month.

Key changes to the definition of “Qualifying Commodities”:

• Removal of the requirement for the commodity to be in “raw form” – This requirement was presenting significant challenges to the industry specifically assessing the meaning of the word "raw" in this context given some level of processing to get the product to a tradeable standard was required in many cases. The risk being that very few commodities would then qualify on a literal reading of the word.
• Inclusion of industrial chemicals and Associated By-products but excluding products packaged for retail sale. Associated By-products are “an incidental or secondary product made during the production or extraction of the metal, mineral, industrial chemical, energy and agricultural commodity.” Previously there was no mention of such elements being eligible meaning the new Decision is welcomed as a clear recognition of the way in which the industry operates.
• Inclusion of environmental commodities (defined as tradeable assets that represent a specific environmental benefit, such as carbon credits or renewable energy certificates).
• Introduction of a “Quoted Price” test – The new Decision requires a commodity to have a “Quoted Price” to be considered as Qualifying. “Quoted Price” is defined as “Price of the Qualifying Commodity or a Related Commodity specified by a Recognised Commodity Exchange Market or a recognised price reporting agency.” The list of Price Reporting Agencies that are recognised was also issued on 3 September 2025 in Ministerial Decision No. 230 of 2025.

Expansion of core income-generating activities falling under “Trading of Qualifying Commodities”:

• Addition of associated structured commodity financing activity – Whilst associated derivatives trading to hedge against commodity risks was always included in the definition of the Qualifying Activity, associated structured commodity financing activities presents a new addition. The Decision defines this activity as “prepayment, factoring, forfaiting, countertrade, warehouse receipt financing, export receivable financing, project finance, Islamic trade finance and streaming financing.”
• This activity cannot be conducted by a QFZP who derives 51% or more of their revenues from distribution, warehousing, logistics or inventory management functions.

Additional updates:

• The Law governing Reinsurance services has been amended from Federal Law No. 6 of 2007 to Federal Decree-Law No.48 of 2023.
• The definition of the Qualifying Activity “Treasury and financing services to Related Parties”, now includes such services provided to third parties.
• The definition of the Qualifying Activity “Distribution of goods or materials in or from a Designated Zone” is amended to include goods or materials that are supplied to Public Benefit Entities.

The new Decision provides a significant development for businesses involved in commodity trading in the UAE that were previous potentially ineligible to benefit from the QFZP regime or struggling to determine their QFZP status. The revised definition now provides greater certainty and clear guidelines to test against.

Affected businesses must act now due to the fast-approaching deadline (less than a month!) – if you would like support with ensuring your business meets the relevant conditions and file confidently, please reach out to one of our experts within the A&M Tax Team!