Dubai Free Zone for Brazilians: UAE Rules and Law 14,754

A Dubai free zone company can pay 0% corporate tax in the UAE, but only on income that UAE law classifies as "qualifying." For a Brazilian resident, a different rule decides the bottom line: Law No. 14,754/2023 (Lei 14.754/2023) treats the company as a controlled foreign entity.

Depending on the case, it taxes the profit on December 31 of each year, even without distribution.

What is a free zone in the UAE?

Federal Decree-Law 47/2022 defines a "Free Zone Person" as a legal entity incorporated or registered in a free zone, including the branch of a non-resident registered there. That entity may or may not be treated as a "Qualifying Free Zone Person" (QFZP) for corporate tax purposes. Being in a free zone does not, by itself, guarantee a zero rate.

The English texts published by the Federal Tax Authority (FTA) are unofficial translations. Before deciding, check the text at the source and with a local professional.

When is the rate 0% in the UAE?

Art. 3, item 2, of Decree-Law 47/2022 sets two rates for a QFZP: 0% on qualifying income and 9% on taxable income that is not qualifying. Art. 18 requires the company to meet all of these conditions:

• •maintain adequate substance in the UAE;
• •earn qualifying income, as determined by the Cabinet;
• •not have elected to be taxed under the general rule (art. 19);
• •comply with arts. 34 and 55 (transfer pricing and its documentation);
• •meet any other conditions set by the Minister.

If the company fails any condition at any point during the period, it ceases to be a QFZP from the start of that tax period (art. 18, item 2). The benefit lasts for the free zone's own incentive period, which can be extended, but each period cannot exceed 50 years (art. 18, item 4).

What counts as qualifying income?

Cabinet Decision 100/2023 (art. 3) lists the categories of qualifying income: transactions with another Free Zone Person (except excluded activities), transactions with a person outside a free zone only for qualifying activities that are not excluded, qualifying intellectual property, and other income within the de minimis limit.

Under the FTA's Free Zone Persons guide, the de minimis test is met when non-qualifying revenue does not exceed the lower of AED 5,000,000 or 5% of total revenue. The same guide requires audited financial statements, regardless of revenue. Which activities are qualifying or excluded is set out in a separate ministerial decision, which you should check for your case.

How does Brazil view a company in Dubai?

Under Law 14,754, art. 5, § 1, a controlled entity is one in which the individual has a preponderant vote in decisions or the power to elect the majority of the directors, or holds, together with related persons, more than 50% of the capital or of the rights to profits.

The regime changes depending on how the controlled entity is classified:

• •Controlled entity falling under art. 5, § 5: profits are taxed on December 31 of each year, in the Annual Adjustment Return, at a rate of 15% (art. 2, § 1), without waiting for distribution. This classification applies if the entity is in a favored-taxation country or benefits from a privileged tax regime (arts. 24 and 24-A of Law 9,430/1996), or if it earns own active income below 60% of total income.
• •Controlled entity outside those cases: profits calculated from 2024 onward are taxed when they are effectively made available to the resident (art. 6, II). Art. 6-A allows an election for the annual rule of art. 5.
• •Election under art. 8: the taxpayer may report the controlled entity's assets, rights and obligations as if they were their own. The election is irrevocable as long as the taxpayer holds the entity.

Own active income is the revenue from the entity's own economic activity, excluding, among others, royalties, interest, dividends, equity interests, rents, financial investments and financial intermediation (art. 5, § 6). A Dubai company used as an investment portfolio tends to fall below 60%. An operation with a real team and real activity may stay above it.

Is the UAE on Brazil's favored-taxation list?

Normative Instruction RFB 1,037/2010 (IN RFB 1.037/2010) lists the favored-taxation countries. In the consolidated version in the Brazilian Federal Revenue Service's (Receita Federal) rules database (read on October 3, 2026), item XXII, "United Arab Emirates," appears as revoked by IN RFB 2,265, of May 9, 2025. Art. 1, as worded by that instruction, uses a criterion of a rate below 17% (previously, 20%).

This takes the UAE off the named list, but it does not close the matter. Art. 24-A of Law 9,430/1996 defines a privileged tax regime by criteria, such as a tax advantage for non-residents without a requirement of substantive economic activity. Whether the regime of a specific free zone fits is a case-by-case analysis, and the company may fall under art. 5, § 5, II, because of its own active income, regardless of the list.

What obligations remain in Brazil?

• •Annual Adjustment Return: the stake in the company goes on the Assets and Rights schedule, and the controlled entity's profit follows the regime described above. Profits calculated in the controlled entity's annual balance sheet are converted at the closing rate of the last business day of December (art. 5, § 10).
• •Tax paid abroad: the deduction for tax paid at source is limited by art. 4 of Law 14,754, which requires a treaty provision or reciprocity, and it cannot exceed the difference between individual income tax (IRPF) with and without the income.
• •Brazilian Capital Abroad report (CBE): BCB Resolution 279/2022 requires the annual report when total assets abroad are equal to or greater than USD 1,000,000 on December 31, and the quarterly report from USD 100,000,000. Deadlines and fines are on the Central Bank of Brazil's page.
• •Information exchange: Brazil and the UAE signed the CRS multilateral agreement (Brazil on October 6, 2016, the UAE on February 22, 2017), with the first exchange scheduled for September 2018, according to the OECD list of signatories.

Living in Dubai changes the tax residency analysis, but that is a separate topic. See the cost of living and residency in Dubai for Brazilians. To compare with other holding designs, see international asset holding and how to declare an offshore company on your income tax return.

When does it make sense to evaluate a free zone?

It makes sense when there is real operation to be run in the UAE, with people, space and expenses that support the substance required by art. 18, and when revenue fits the qualifying categories. For someone who only wants to hold investments or receive passive income, Law 14,754 tends to tax the profit annually, and the UAE benefit does little for the Brazilian result. No structure reduces tax by itself: the outcome depends on the case, and license, office and audit costs should be quoted by the chosen free zone.

See also the services for corporate structures and tax planning, and the Dubai/UAE jurisdiction page.