Key Takeaways
- ADGM is a free zone for corporate tax purposes
- The 0% rate depends on QFZP conditions being met
- Substance and audited accounts are essential
Abu Dhabi Global Market is a financial free zone, so its entities can potentially benefit from the free zone corporate tax regime. As with all free zones, the benefit is conditional and requires careful structuring.
ADGM as a free zone person
ADGM entities fall within the free zone corporate tax framework, meaning they may qualify for the 0% rate on qualifying income. However, being located in ADGM is not enough on its own — the Qualifying Free Zone Person conditions must be satisfied.
Meeting QFZP conditions
To qualify, an ADGM entity must maintain adequate substance, derive qualifying income, comply with transfer pricing, and prepare audited financial statements. Financial-services firms in particular should assess which of their activities and income streams are qualifying.
Getting the structure right
Because ADGM hosts complex financial businesses, professional tax advice is valuable to map income streams, document substance, and manage related-party arrangements so the QFZP position is defensible under FTA review.
