Ministerial Decision 229 of 2025: Qualifying Activities, and Why MD 265 Content Is Stale

Ministerial Decision No. 229 of 2025 is the current source of the Qualifying Activities and Excluded Activities lists for UAE free zone companies. Article 6 of that decision explicitly repealed Ministerial Decision No. 265 of 2023, and it applies retroactively from 1 June 2023 — so it governs tax periods that have already been filed.

If a page you are reading cites MD 265 of 2023 as the authority for qualifying activities, it is citing a repealed instrument. That is not a technicality, because MD 229 widened three categories in ways that change real answers.

Is Ministerial Decision 265 of 2023 still in force?

No. MD 229 of 2025 repealed it. The repeal is in Article 6 of MD 229, and the decision is drafted to take effect from 1 June 2023 — the date the Corporate Tax Law itself began to apply to businesses' first financial years.

That retroactive reach is unusual and it is the point most summaries skip. MD 229 was issued in 2025, but it does not only govern 2025 onward. It governs every tax period since the regime started.

The current list of Qualifying Activities

These are the activities that produce Qualifying Income when carried out with a non-free-zone customer. Income from these lines is taxed at 0% for a Qualifying Free Zone Person that meets all the other conditions.

• Manufacturing of goods or materials
• Processing of goods or materials
• Trading of Qualifying Commodities [expanded in 2025]
• Holding of shares and other securities for investment purposes
• Ownership, management and operation of ships
• Reinsurance services
• Fund management services
• Wealth and investment management services
• Headquarters services to Related Parties
• Treasury and financing services [expanded in 2025]
• Financing and leasing of aircraft, including engines and rotable components
• Distribution of goods or materials in or from a Designated Zone [clarified in 2025]
• Logistics services
• Activities ancillary to any of the above

Note what is not on that list. It is narrower than most founders expect — a general trading company selling to mainland UAE customers is not automatically carrying on a Qualifying Activity, and neither is a consultancy. Income from transactions with other Free Zone Persons who are the beneficial recipient is a separate route to Qualifying Income and does not depend on this list at all.

What MD 229 changed

Three concrete expansions, each of which moves the boundary.

Qualifying Commodities now covers more than metals and agri. The category was extended to include industrial chemicals, associated by-products, and environmental commodities such as carbon credits and renewable energy certificates. A carbon-credit trading desk that fell outside the qualifying list under MD 265 may now sit inside it.

Treasury and financing services no longer have to be for Related Parties. MD 265 covered treasury and financing services provided to Related Parties. MD 229 extends the wording to services provided to Related Parties or for the entity's own account. That is a meaningful widening for group treasury vehicles and for entities running their own book.

Distribution from a Designated Zone was clarified. The activity now clearly covers goods entering the UAE through the Designated Zone and supplied to customers who resell or process them, or to public-benefit entities. Distribution has always carried the physical Designated Zone requirement — the clarification is about what happens to the goods downstream, not about relaxing the location test.

Do not mistake a Designated Zone for a free zone. They are different concepts under different laws, and several of the largest and best-known free zones are not Designated Zones.

The Excluded Activities list

Income from these activities is not Qualifying Income even when the customer is another Free Zone Person.

• Transactions with natural persons, other than specific carve-outs (certain fund and wealth management services, and specified ship-related activities)
• Banking activities
• Insurance activities, other than reinsurance
• Finance and leasing activities, other than qualifying treasury and financing services and aircraft leasing
• Ownership or exploitation of immovable property, other than commercial property located in a free zone where the transaction is with another Free Zone Person
• Activities ancillary to any of the above

The transactions-with-natural-persons exclusion is the one that catches consumer businesses. If you sell to individuals rather than companies, the default position is that the revenue is non-qualifying, and it then has to fit inside the de minimis allowance — which for most companies is 5% of total revenue, not AED 5 million.

Why retroactivity matters

A decision that applies from 1 June 2023 reaches back over filings you have already made.

For most companies this is good news rather than bad, because the changes in MD 229 are expansions. An activity that was outside the qualifying list under MD 265 and is inside it under MD 229 was, on the face of the retroactive drafting, always inside it. That can turn revenue you treated as non-qualifying into Qualifying Income for a period already filed.

The direction is not guaranteed to be favourable in every case, though, and the interaction with the de minimis calculation is where it gets fiddly: reclassifying revenue changes both the numerator and, in some fact patterns, the denominator of the test.

What to do if your filings relied on the old list

1. Identify which periods are affected. Any tax period beginning on or after 1 June 2023 is in scope. For a calendar-year company that means FY2023 onward.
2. Re-run the activity classification against MD 229, not MD 265. Concentrate on the three expanded categories — commodities, treasury and financing, and distribution from a Designated Zone.
3. Re-run the de minimis test with the new classification. If revenue moves from non-qualifying to qualifying, your headroom improves. Confirm rather than assume.
4. Take advice on whether an amended return is appropriate. We are not going to tell you whether to amend a filed return; that depends on materiality and on your own position with the FTA.

Where this bites hardest is entities whose licensed activities map onto the financial-services end of the list — fund management, wealth and investment management, reinsurance, treasury. Those are precisely the categories ADGM licenses, which is why an ADGM entity is more likely than most to be affected by the 2025 changes. Our ADGM record sets out the licence categories in full, along with the fee schedule the zone publishes in US dollars.

MD 230 of 2025 — the companion decision

Ministerial Decision No. 230 of 2025 was issued alongside MD 229 and also relates to the Qualifying Free Zone Person regime. We have identified it but have not yet analysed it, and we are not going to summarise a decision we have not read properly.

That is a live gap in this post and we would rather say so than fill it. When we have worked through MD 230 we will update this page and log the change in our data changelog.

Where this sits in the wider picture

Getting the activity list right is one of eight conditions, not the whole test. A company can be squarely inside the Qualifying Activities list and still fail QFZP status on substance, on transfer pricing documentation, or on the audit requirement. The full eight-condition checklist is the place to check yourself against all of them.

MD 229 is also not the only place where free zone content has fallen behind the law. Economic Substance Regulations filings were cancelled for financial years ending after 31 December 2022, and a great deal of advisory content still describes them as a live annual obligation — we covered that separately.

And if you are still choosing where to incorporate: the activity list is federal. No free zone can widen it for you, and any zone that implies otherwise is selling rather than advising.