UAE Free Zone Distribution: The New AUP Report Requirement
Qualifying Free Zone Persons carrying on qualifying distribution of goods or materials in or from a Designated Zone now have an additional evidence requirement: an agreed-upon procedures report. FTA Decision No. 6 of 2026 applies to tax periods starting on or after 1 January 2026.
This requirement concerns the qualifying distribution activity specified in the decision. It is not a new report required of every free-zone company simply because it has a free-zone licence. Read FTA Decision No. 6 of 2026.
What is the AUP report?
Under Article 2, the independent external auditor who audits the financial statements, or another independent auditor licensed in the UAE, prepares the report under ISRS 4400. It documents specified procedures and factual findings. The work addresses customer resale status and, where the QFZP imports goods into the UAE, importation through a Designated Zone.
The report must reach the FTA no later than thirty days after the relevant Corporate Tax return filing deadline, unless the FTA determines another date. Failure to submit means the conditions identified in Article 2(8) are not considered met. Do not assume that arranging the ordinary financial-statement audit also commissions or submits this separate report.
What should the distribution file contain?
The decision identifies customer licences, declarations or confirmations, and transaction records supporting resale or onward supply. For imports, it identifies customs and transport evidence supporting entry through a Designated Zone. Article 3 prescribes procedures and sampling, including attention to the highest-value customers, agreements or imports within the relevant populations. Agree the detailed scope with the appointed auditor against the decision.
Prepare the evidence while the transactions are current
A customer master may show “trading” without explaining what the customer does with your goods. A shipping folder may show a port without matching the consignment to the sales and inventory records. Those are practical gaps worth finding before the audit team starts selecting samples.
Our suggested starting point is a transaction register linking customer identity, the relevant period, sales records, resale evidence and import documents where applicable. Keep unresolved items visible. If the business handles several activities, separate the population relevant to qualifying distribution before asking someone to test it.
| Question | Why it helps |
|---|---|
| Which revenue is being treated as qualifying distribution? | Defines the population to examine. |
| Who holds the customer evidence? | Prevents a last-minute search across sales inboxes. |
| Can imports be traced through the relevant zone? | Connects customs, shipping and internal records. |
| Who has accepted the AUP engagement? | Distinguishes this deliverable from the annual audit. |
| Who owns submission and proof of submission? | Turns a completed report into a completed obligation. |
How does this fit the wider free-zone position?
The report addresses a particular activity and its supporting evidence. A wider review still needs to consider the business’s qualifying income position, its other activities and the conditions for QFZP status. Our free-zone clarification commentary explains why the details of the transaction matter as much as the licence.
For a distributor, this work can also reveal gaps in the purchase-side evidence needed for VAT supplier verification. The tests serve different taxes and should be assessed separately, even where the same commercial records help explain the supply chain.
Frequently asked questions
Does every UAE free-zone business need this AUP report?
No. Decision No. 6 of 2026 addresses Qualifying Free Zone Persons engaged in the specified qualifying distribution activity in or from a Designated Zone.
Can our existing auditor prepare the report?
Yes. The decision permits the independent external auditor responsible for the financial-statement audit or another independent auditor licensed in the UAE.
When must the AUP report be submitted?
No later than thirty days after the Corporate Tax return filing deadline for the relevant period, or another date determined by the FTA. The decision applies to periods starting on or after 1 January 2026.
Sources checked on . Practical examples and preparation suggestions are Phoenix Advisory commentary.
General information, not advice on a particular transaction. FTA decision PDFs linked here are labelled unofficial English translations; consult the Arabic legal text where interpretation differs.
Is your distribution evidence ready for the auditor?
We can help assess the tax position and organise the supporting file for the independent auditor’s work.
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