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- TECOM Group’s 2025 tax note names the mechanism outright: AED 107 million of its tax bill disappears because the income sits inside a UAE free zone, pulling the DFM-listed company’s effective tax rate down to 4.08% against a 9% statutory starting point.
- AD Ports Group’s free zone cluster, KEZAD, carries its own effective tax rate of roughly 7.6% by the same math, a real discount, but small enough that the ADX-listed group’s overall rate still lands close to the UAE’s 9% standard.
- The difference between the two traces back to size: TECOM’s AED 2.86 billion in 2025 revenue sits below the threshold that triggers a new 15% global minimum tax. AD Ports Group’s AED 20.8 billion does not.
A UAE free zone company can earn 0% corporate tax on Qualifying Income. Everything else it earns is taxed at the standard 9% rate above AED 375,000 in profit, the same rate a mainland company pays. ⁽¹⁾
Whether that 0% actually shows up in a company’s reported numbers is a separate question. The DFM and ADX answer it differently.
What Counts as Qualifying Income
The 0% rate depends on the activity. Income from another free zone business generally qualifies. So does income from a defined list of Qualifying Activities, including manufacturing, logistics, and distribution of goods in or from a designated zone.
Some of these activities still qualify even when the customer is a mainland or overseas company, not another free zone entity. ⁽⁴⁾
Distribution only counts if the goods physically move through the designated zone. Transactions with natural persons are excluded outright, aside from a short list of exceptions.
TECOM’s Tax Note Names the Free Zone Effect
TECOM Group, the DFM-listed operator behind Dubai Internet City, Dubai Media City, and several other Dubai business-park free zones, posted 2025 profit before tax of AED 2.17 billion. Its tax charge for the year was AED 88.7 million. ⁽²⁾
That works out to an effective tax rate of 4.08%, under half the 9% statutory rate.
Most companies leave a reader to infer why their tax rate sits below standard. TECOM’s reconciliation table does not. It isolates a single line item, “income from qualifying free zone entities,” worth AED 107 million in tax savings.
That one line accounts for almost the entire gap between what TECOM would have paid at the standard rate and what it actually paid. ⁽²⁾ Management says as much directly: the deviation from 9% is “primarily driven by subsidiaries operating in free zones that are subject to 0% corporate tax.” ⁽²⁾
AD Ports Splits Into Segments With Different Rates
AD Ports Group, listed on ADX under the ticker ADPORTS, tells a less clean-cut story. Its audited 2025 accounts show profit before tax of AED 2.27 billion and a tax charge of AED 203.1 million. ⁽³⁾
That is a group-wide effective tax rate of about 8.9% — barely below the UAE’s 9% standard, despite the group also paying corporate tax in Spain, Egypt, Pakistan, Syria, and Angola, where rates typically run higher.
The group figure hides more than it reveals. AD Ports Group reports its results by segment, and one of those segments, Economic Cities & Free Zones, is the division that runs KEZAD in Abu Dhabi.
Working from that segment’s own disclosed profit and tax figures, its effective tax rate comes out to roughly 7.6%, a real discount from the 9% standard, but a modest one. ⁽³⁾
It is not even the group’s lowest-taxed segment. Maritime & Shipping, a segment with no free zone designation of its own, posted an effective tax rate of about 3.8% in 2025, lower than KEZAD’s, for reasons the accounts do not break out. ⁽³⁾
The free zone effect at AD Ports Group is real. It is just smaller, on this evidence, than a segment effect that has nothing to do with free zones at all.
The Cliff Nobody Budgets For
Free zone companies are allowed some non-qualifying revenue without losing their status. The limit is 5% of total revenue or AED 5 million, whichever is lower. ⁽⁴⁾
Cross that limit, and the consequence is not proportional.
The entity loses Qualifying Free Zone Person status entirely, for that tax period and the following four. Five years of income, all of it, gets taxed at 9%. ⁽⁴⁾
Land Sales Sit Outside the Exemption
In 2025, KEZAD sold a plot to Mira Developments for AED 2.47 billion and two warehouses to Aldar Properties for AED 570 million. ⁽³⁾
UAE tax law generally excludes income from immovable property, with one narrow exception: commercial property inside a free zone, sold to another free zone person. ⁽⁴⁾ Mira Developments and Aldar Properties are both mainland developers.
The gains on those sales likely sit outside the 0% exemption. The land deals that make KEZAD’s growth most visible to investors are, on the tax side, probably the least representative of the exemption itself.
The 15% Floor Reaches One Company, Not the Other
Since 1 January 2025, a Domestic Minimum Top-up Tax has applied to multinational groups with global consolidated revenue of EUR 750 million or more, roughly AED 3.15 billion, operating in at least two countries.
It sets a 15% minimum effective tax rate on UAE profit, overriding what the free zone exemption would otherwise allow. ⁽⁵⁾
TECOM Group’s 2025 revenue of AED 2.86 billion sits below that threshold.
Its free zone benefit, tax note and all, flows through untouched.
AD Ports Group’s 2025 revenue of AED 20.8 billion, combined with operations spanning Egypt, Syria, Pakistan, Angola, and Spain, puts it well within the rule’s scope. ⁽³⁾ ⁽⁵⁾
Whether its actual UAE tax bill rises depends on details it has not yet disclosed, including how much of its payroll and physical assets qualify for the rule’s substance-based carve-out.
Reading These Earnings
Three things now need separating when a DFM or ADX-listed company reports free-zone-linked earnings:
- Income genuinely tied to a Qualifying Activity and disclosed as such
- One-off gains, like land sales, that usually sit outside the exemption
- For groups above the DMTT threshold, a 15% floor that did not exist before this year
TECOM’s tax note shows what the mechanism looks like when a company is small enough, and its disclosure clean enough, to make the link explicit.
AD Ports Group shows what it looks like when the same mechanism is real but partial, sitting inside one segment of a much larger, multi-jurisdiction group.
Understanding how the DFM and ADX differ as listing venues is a useful starting point for spotting which exchange carries more of this exposure.
