How is taxability determined when a Free Zone Person transacts with a Non-Free Zone Person?
Taxability of transaction with non-free zone person are bifurcated as under:
- Transactions in relation to Qualifying activities that are not excluded activities:
If a Qualifying Free Zone Person derives income from Non-Free Zone Persons in relation to Qualifying Activities that are not excluded activities, then such income shall be considered as Qualifying Income and thus subject to 0% Corporate tax.
- Transactions in relation to other than Qualifying activities:
If a Qualifying Free Zone Person derives income from Non-Free Zone Persons in relation to other than Qualifying Activities, the resultant income will be taxed at 9% Corporate Tax rate.