Treasury and financing “for its own account” under Ministerial Decision 229 of 2025

What “for its own account” should be taken to mean

The phrase “for its own account” is best read as distinguishing proprietary treasury from service-center treasury:

• Acting as service-center treasury, the QFZP renders treasury/financing as services to Related Parties (classic shared-service model with intercompany lending, cash pooling, centralized pay/collect).
• In case of proprietary (“own-account”) treasury, the QFZP deploys or protects its own balance sheet as principal, e.g. placing deposits, making money-market placements, holding debt instruments, or hedging its own risks.

Pre-amendment guidance already accepted bank deposit interest as qualifying (via self-investment). In Free Zone Persons Corporate Tax Guide No. CTGFZP1, the FTA qualifies an income from bank deposits for the 0% Corporate Tax rate as an income from treasury and financing services to Related Parties, where the taxpayer itself should be considered as a Related Party.[1] Indeed, no party can be more closely related to a person than the person itself.

In particular, the FTA provides Example 75 where “a Free Zone Person deposits its working capital in an Interest-bearing bank account… The Interest income will be treated as arising from the Qualifying Activity of treasury and financing services to Related Parties…”. This example follows the general conclusion where the FTA sets out “The reference to “Related Parties” for the purposes of the Qualifying Activity of providing treasury and financing services includes juridical persons and branches of juridical persons as per Article 35(1)(c) and (d) of the Corporate Tax Law, as well as Domestic Permanent Establishments and self-investment”. The FTA eventually concluded that ‘interest income from bank deposit’ earned on working capital by QFZP shall be treated as qualified for zero rate as self-investment.

Finally, in Sec. 10.2.3 the FTA again dwells on this topic in the context of an ancillary activity: “A QFZP may generate surplus funds that are not essential for the immediate needs of its Business but may be required for identified future working capital requirements. In that case, the QFZP may decide to retain the funds for future use, rather than returning the surplus to investors.  The investment of surplus funds is not considered as an ancillary activity. The investment would either need to be a Qualifying Activity in its own right (for example, treasury and financing services to Related Parties, which includes oneself) or the income from the investment would be non-qualifying Revenue for purposes of the de minimis requirements”.

MD 229 now embeds this logic in the legal text by naming “for its own account”.

Two guardrails frame this reading:

• First is regulatory boundary. “Finance and leasing activities” are an Excluded Activity where they are subject to regulatory oversight of a Competent Authority. However, the Excluded Activity list is drafted “without prejudice to … (j)”. So, if a transaction falls squarely within Art. 2(1)(j) it is not excluded merely because it is financing.
• Second is “Banking activities” exclusion. These are separately excluded by Article 2.2(a). There is no “without prejudice” carve-back, no exception for Article 2(1)(j). So, regulated banking remains out unless the de minimis is respected. The FTA cautions on this in Section 11.3 of CTGFZP1.

Taken together, these two guardrails delineate the outer perimeter of the treasury and financing limb. Financing activities that would otherwise fall under the general exclusion may still qualify where they fit within the specific language of Article 2(1)(j), because the “without prejudice” clause ensures that treasury services (whether intra-group or for own account) are not displaced by the general exclusion.

Banking activities, by contrast, are treated differently. The legislator has drawn a hard line by placing them in a separate exclusion without any saving clause. Once an activity falls within the statutory definition of banking, it is conclusively excluded from the Free Zone regime, and only the de minimis rule can accommodate incidental banking-type income within an otherwise qualifying profile. This asymmetry signals the clear intention to ring-fencing banking activities from access to 0% rate.

Against this backdrop, the interpretive question becomes sharper: how should “for its own account” be understood in relation to financing transactions that do not constitute banking activities? The answer requires attention to the interplay between proprietary balance-sheet deployment and the provision of services to third parties, as well as to the economic rationale of classifying certain placements or investments as proprietary treasury income rather than as an excluded financial business. The following sections turn to this analysis.

[1] Sec. 10.12 of the Corporate Tax Guide Free Zone Persons No. CTGFZP1

Addressing the core interpretive dispute

A central interpretive issue is whether external lending to non-Related Parties can be subsumed under the notion of acting “for its own account”. The distinction cannot rest on the presence of a profit motive, since both service-center treasury and proprietary treasury functions are designed to generate returns. Rather, the decisive criterion is capacity. Activities carried out for its own account are undertaken as principal, in contrast to those performed for or on behalf of another person (whether client or affiliate).

On this view, where a Qualifying Free Zone Person originates a bilateral loan as principal and not pursuant to a mandate to provide services, it is operating on its own account in the sense envisaged by corporate treasury practice. The above deposit example illustrates this most clearly: in economic terms, the Free Zone Person is financing the bank as principal, and the interest received has already been treated in CTGFZP1 as treasury or financing income, previously justified under the rubric of self-investment.

Accordingly, the operative distinction lies not in whether the activity yields profit but in the legal and economic capacity in which it is undertaken. Article 2(3)(j) enumerates functions (cash and liquidity management, financing, debt management, financial risk management and related advisory, and centralized payment and collection) that may be performed either for Related Parties or on a proprietary basis. When these functions are carried out as principal, they fall within the “own account” limb even if the counterparty (bank or another borrower) is an unrelated third party, provided the transaction does not amount to a regulated banking activity. This reading ensures that the treasury limb remains anchored in the distinction between:

• self-directed balance-sheet management and
• the rendering of treasury services on behalf of others.

Regulatory parallels to “for its own account”

The phrase “for its own account” is not novel in financial law. It echoes distinctions that are well established in both international and UAE regulatory practice, where a clear line is drawn between activities undertaken as principal and those carried out on behalf of others.

In the European Union, for example, Article 4(1)(6) of the Markets in Financial Instruments Directive II (Directive 2014/65/EU, “MiFID II”) defines “dealing on own account” as trading against proprietary capital that results in positions held by the firm itself. This definition is foundational: it determines when a firm requires authorization, what prudential standards apply, and how far conduct rules extend to client-facing business.

The same logic underpins U.S. law. The Volcker Rule, enacted through Section 13 of the Bank Holding Company Act (12 U.S.C. 1851), prohibits banking entities from engaging in “proprietary trading” (i.e. trading as principal for the bank’s own trading account) while permitting customer-facing activities such as market-making and underwriting. The dividing line is not whether the activity is profitable, but the capacity in which it is undertaken: as principal for the bank’s own account, or as agent/intermediary for a client.

The implementing rules at 12 C.F.R (Part 44) refine this distinction with concrete categories. Transactions executed as fiduciary (for a customer’s account, with no beneficial ownership retained) fall outside “own account”. By contrast, market-making requires a desk to hold positions “for its own account”, even though the activity supports client intermediation. Riskless principal transactions illustrate the hybrid: although booked to the bank’s account, they are effectively client services because the bank bears no lasting risk.

This U.S. framework provides a useful interpretive analogy for Article 2(3)(j) of MD 229/2025. A QFZP acts “for its own account” only where it retains beneficial ownership and risk on its balance sheet. If it merely arranges or intermediates transactions for another (whether as fiduciary, riskless principal, or fee-based advisor) it moves into the service-provider category, which the UAE regime confines to Related Parties.

The UAE’s financial regulators articulate the distinction in similar terms. The Dubai Financial Services Authority (DFSA) Rulebook defines an “Own Account Transaction” as a transaction executed by an Authorised Firm “for its own benefit or for the benefit of its Associate”. The latter corresponds to concepts such as a Related Party or Connected Person under the Corporate Tax regime. The DFSA expressly contrasts proprietary dealings of this kind with client-facing transactions, subjecting the latter to separate licensing and conduct frameworks.

Within the Abu Dhabi Global Market (ADGM), treasury centers are allowed to conduct cash pooling, intercompany lending, and hedging as principal,[1] but they may not engage in unlicensed deposit-taking or provide services akin to banking for third parties.

The Central Bank of the UAE (CBUAE) enforces a similar distinction, carefully separating amounts payable for a firm’s own account from funds held in trust or fiduciary capacity on behalf of clients.

[1] PwC. Establishing regional treasury centres in ADGM, May 2019. Available via link: https://www.pwc.com/m1/en/tax/documents/establishing-regional-treasury-centres-abu-dhabi-global-market-adgm.pdf

The FTA on “for one’s own account” term

The FTA in the UAE reinforces this same dichotomy. In Public Clarification VATP039 on Crypto Mining, the FTA explained that mining undertaken “for one’s own account” (i.e. where no identifiable recipient exists) is not considered a supply for VAT purposes. By contrast, mining carried out “on behalf of another person” constitutes a taxable supply of services. The capacity-based criterion, familiar from financial regulation, is therefore equally embedded in tax interpretation.

Three cumulative conditions for own-account treatment

Taken together, the above examples reveal a consistent conceptual framework. Whether in MiFID II, the Volcker Rule, the DFSA and ADGM regimes, the CBUAE’s supervisory practice, or the FTA’s VAT guidance:

• own-account activity is characterized as proprietary deployment of capital by a principal,
• while client activity denotes services rendered on behalf of others.

In practice, this means that where a QFZP places deposits, acquires debt instruments, or originates bilateral loans as principal, it is acting on its own account:

• the exposures sit on its balance sheet, and
• the income is properly classified as qualifying treasury income.

By contrast, where the QFZP provides financing or treasury functions on behalf of another person (whether by arranging, advising, or intermediating), the activity assumes the character of a service in its own right. In such cases, the service is directed exclusively to meeting the treasury and financing needs of the client, and has no connection to the QFZP’s own liquidity or balance-sheet requirements. These activities qualify only when rendered to Related Parties. Once extended to non-Related Parties, they risk classification as Excluded Activities unless protected by the de minimis rule.

The unifying theme is therefore not the profit motive, present in both proprietary and client activities, but three cumulative conditions:

• The QFZP must act proprietarily, deploying its own balance sheet and retaining beneficial ownership of the instrument.
• The transaction must serve a treasury function, i.e. the management of the QFZP’s own liquidity position rather than the provision of a freestanding service to a counterparty. Own-account financing is a service only in a derivative way, channeling temporarily free capital into instruments that both generate income and remain accessible to support the QFZP’s principal operations.
• The activity must not cross the regulatory line into banking activities, which remain categorically excluded unless saved by the de minimis rule.

Taken together, these conditions provide a coherent test for “for its own account” under Article 2(3)(j), aligning tax interpretation with regulatory boundaries.

How far does Art. 2(3)(j) now reach?

The addition of the words “for its own account” raises the question of how far the treasury limb extends in relation to transactions with non-Related Parties. A purposive reading of the provision suggests that the expression “provision of … financing … for its own account” is broad enough to encompass placements of funds with unrelated counterparties, so long as the above three cumulative conditions are met.

On this view, proprietary placements in the form of time deposits, commercial paper, or bond holdings are plainly within scope, since they mirror the treatment already given in the Free Zone guidance to deposit interest.

Even bilateral loans originated as investments (i.e. direct loans negotiated with a single borrower and booked on the QFZP’s balance sheet as an asset to deploy surplus funds) can be regarded as qualifying when they are undertaken as proprietary transactions. In substance, such bilateral loans are akin to private placements or bond investments: they represent the QFZP acting as principal to earn a return on its own capital, rather than providing a financing service to customers. Provided the activity does not cross the line into regulated finance or banking, these placements fall within the “for own account” limb of Article 2(3)(j).

Even bilateral loans originated as investments (i.e. direct loans negotiated with a single borrower and booked on the QFZP’s balance sheet as assets to deploy surplus funds) can be regarded as qualifying, provided three cumulative conditions are met. When these conditions are satisfied, bilateral loans are akin in substance to deposit placement and therefore fall within the “for its own account” limb of Article 2(3)(j), rather than constituting a financing service to customers.

By contrast, where treasury or financing functions are performed on behalf of another person, the activity is no longer “for own account”. In such cases, MD 229/2025 permits the service only in relation to Related Parties. Once extended to non-Related Parties, the activity is excluded unless it can be sheltered by the de minimis rule or re-characterized under another qualifying limb (for example, structured commodity financing under trading of qualifying commodities or holding of shares and other securities).

This could be illustrated with the example of a free zone treasury entity holding AED 100 million of surplus liquidity. Instead of placing it on fixed deposit with a bank, it negotiates a bilateral loan with a corporate borrower outside the group, earning interest at 7%. Such a loan is a proprietary investment: the QFZP is acting as principal, deploying its own balance sheet to generate income.

By contrast, if the same entity were to offer loan products to the public on a recurring basis, it would cross the boundary into regulated lending activity, which is classed as banking and therefore excluded from the Qualifying Activities regime.

A further contrast can be drawn with a case where the QFZP enters into a loan arrangement on behalf of another non-Related Person, for example, acting as an arranger or facilitator of credit for an unrelated client. In that scenario, the QFZP is no longer acting as principal but as a service-provider in a client-facing capacity. Such activity falls outside the “own account” limb and, because it involves services to non-Related Parties, it would not qualify under Article 2(3)(j), unless protected by the de minimis rule or falls under another limb of qualifying activities list.

A further nuance arises if the bilateral loan structure is replaced with a syndicated loan involving multiple lenders. Where a QFZP participates in such a syndicate by deploying only its own surplus funds, it continues to act for its own account. Its role is confined to principal investment, and the income it derives (whether interest or proportionate fees) has the same character as a time deposit or bond holding. The presence of other co-lenders does not alter the fact that, in respect of its own tranche, the QFZP remains a proprietary investor.

The analysis changes, however, if the QFZP also assumes the position of arranger or aggregator of the syndicate. In that capacity, it not only invests its own funds but also solicits and channels the funds of third parties into a collective loan facility. While the QFZP’s own contribution still qualifies as an own-account placement, the aggregation and deployment of other parties’ capital constitutes intermediation on behalf of non-Related Persons. In substance, this is no longer proprietary treasury but a service to external investors, akin to arranging or facilitating finance. Such intermediation falls outside Article 2(3)(j).

To illustrate, assume a QFZP holds AED 50 million in surplus liquidity and joins a syndicated facility of AED 500 million alongside four commercial banks. Its own AED 50 million participation is a qualifying proprietary investment. If, however, the QFZP also structures the syndicate and channels commitments from other investors, the fees earned for that arranging function represent client-service income rather than own-account income, and must be analyzed under the qualification framework.

It should be noted that pass-through funds, including both principal amounts and the interest or fees attributable to other investors, are not part of the QFZP’s revenues. Only the remuneration it receives for its aggregation or arrangement role constitutes its income for Corporate Tax purposes, and it is this remuneration that must be tested against the de minimis threshold.

Bank-managed portfolios and the scope of Article 2(3)(j)

A further layer of complexity arises where a QFZP entrusts its liquidity not to direct placements or bilateral loans, but to a bank-managed portfolio under a discretionary mandate. In such arrangements, the QFZP remains the beneficial owner of the assets and bears the economic risks, while the bank or investment manager acts merely as agent in executing the mandate.

This structure is encountered not only in the management of the QFZP’s own surplus liquidity but also in situations where group liquidity is entrusted to the manager on behalf of Related Parties. So, from a doctrinal standpoint, the issue transcends the interpretation of “for its own account”:

• Where the mandate covers group liquidity, the QFZP is arguably performing a treasury function “to Related Parties”, albeit through the medium of an external manager.
• Where the funds are its own, the QFZP is acting “for its own account”.

In either case, the Corporate Tax question is:

• whether such portfolios fall within Article 2(3)(j), which lists “cash and liquidity management” among the qualifying functions, or
• whether they fall to be tested under a different qualifying limb.

A bank-managed mandate may fall under Art. 2(1)(j) where it is an instrument of cash and liquidity management, i.e. treasury for the QFZP’s own account or to Related Parties. By contrast, where the mandate entails holding of shares and other securities as an investment, the correct lens is Art. 2(1)(d) rather than (j). That limb qualifies holding of shares and a broad range of securities for investment purposes, and the law deems the purpose satisfied if the holding period (or evidenced intention) is at least 12 months. Active trading or short-term positions fall outside that limb. In short:

• 2(1)(j) governs proprietary liquidity deployment, while 2(1)(d) governs long-term investment holdings;
• positions that fail the investment-purpose test, i.e. 2(1)(d) here, do not qualify and must be assessed:
  • under other limbs, that could be (j) limb here, or
  • the de minimis rule.

This classification echoes standards already familiar in accounting and prudential regulation.

Under IAS 7:6(2), ‘cash equivalents’ are defined as “short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value”. Pursuant to IAS 7:7, “cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. For an investment to qualify as a cash equivalent it must be readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value. Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition. Equity investments are excluded from cash equivalents unless they are, in substance, cash equivalents, for example in the case of preferred shares acquired within a short period of their maturity and with a specified redemption date”.

The accounting definition of cash equivalents under IAS 7 underscores the same functional boundary that emerges in the Corporate Tax context. Instruments qualify as treasury or liquidity management tools only if:

• they are short-term,
• readily realizable, and
• insulated from significant value risk.

Equity positions, by contrast, are excluded from the category of cash equivalents except in the rare case where they are economically indistinguishable from debt instruments nearing maturity (e.g. redeemable preference shares). This reinforces that the treasury limb of Article 2(3)(j) is confined to the management of liquid, low-risk instruments aligned with short-term cash commitments, while equity portfolios fall outside and must instead be assessed under the investment limb of Article 2(1)(d), with its distinct “investment purpose” condition. In doctrinal terms, the IAS 7 framework strengthens the argument that equity exposures cannot be assimilated into liquidity management under (j), and instead demand separate classification as investment holdings.

Instruments meeting IAS 7 test, such as deposits and highly liquid debt, sit naturally within treasury functions. Similarly, Basel III’s HQLA definition recognizes certain short-dated sovereign and corporate debt instruments as liquidity buffers for regulatory capital purposes.[1] Both frameworks affirm that liquidity management can include investments in market instruments, but only where they are readily realizable and not subject to trading intent.

The classification thus hinges on whether the bank-managed portfolio is genuinely an instrument of liquidity management, or whether it is better characterized as investment holding:

• If the portfolio is used for short-term liquidity deployment pending operational needs, it is consistent with treasury activity under (j).
• If, however, it resembles active asset management or high-frequency trading, the character shifts: the QFZP is no longer managing liquidity but engaging in investment business that falls outside Article 2(1)(d).

This delineation preserves the policy logic of MD 229/2025: treasury under (j) captures proprietary liquidity management (including own-account financing) while long-term investment holdings of shares and other securities are recognised independently under (1)(d).

The unresolved doctrinal issue is how to treat portfolios that sit between these categories, particularly where a bank-managed account mixes short-term liquidity instruments with equity positions (such as shares, equity ETFs, or equity-linked instruments).

While equities may be highly liquid in market terms, they are not treated as cash equivalents under IAS 7 or as HQLA under Basel, and under MD 229 they can only qualify if held as long-term investments under Article 2(1)(d). In short, equity exposures are problematic because they sit between the two limbs:

• too speculative or volatile to be liquidity management under (j), but
• not automatically qualifying as long-term investment holdings under (d) unless the 12-month purpose test is satisfied.

In practice, QFZPs must therefore carefully document the purpose of the mandate, the nature of the instruments, and the expected holding period, and may invoke benchmarks such as IAS 7 cash-equivalent criteria or Basel HQLA classifications to evidence that the portfolio functions as liquidity management rather than as investment holding.

This classification exercise is not unique to the UAE tax framework. Comparable tests are embedded in accounting and prudential standards that distinguish between liquidity instruments and investment holdings. For instance, IAS 7 defines “cash equivalents” in terms of short-term convertibility and low risk, while Basel III identifies “High-Quality Liquid Assets” for regulatory liquidity purposes. These external benchmarks reinforce that the distinction between treasury activity and investment holding is not merely semantic but rooted in widely accepted financial taxonomy.

To situate Article 2(3)(j) within this broader landscape, the following comparative table sets out the treatment of instruments under the UAE Corporate Tax rules (Articles 2(3)(j) and 2(1)(d)), IAS 7, and Basel III, highlighting points of convergence and divergence.

[1] Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools” (January 2013), paragraphs 24-54. Available via link: https://www.bis.org/publ/bcbs238.pdf

Comparative framework for bank-managed portfolios

From liquidity to advisory: testing the limits of treasury functions

The Minister included in the financial services list “the provision of cash and liquidity management, financing, debt management, and financial risk management and related advisory services, including centralised payment and collection activities”. This formulation applies equally to treasury and financing activities performed for Related Parties and those undertaken for the QFZP’s own account.

Some of these functions are relatively straightforward to imagine as straddling both categories. A loan to a Related Party is simultaneously a service (intra-group financing) and a proprietary deployment of funds (balance-sheet lending by the treasury entity). Similarly, a loan to a third party may be seen in two ways:

• if extended in response to group liquidity needs, it is a service to the group;
• if extended for the treasury entity’s own investment purpose, it is an own-account transaction.

Other positions on the list are less easily mapped onto the own-account limb. Debt management, for example, is inherently tied to a QFZP’s own liabilities. Once it is performed for another party, it hardly takes a form of proprietary activity. Centralized payment and collection is likewise service-oriented by nature: it exists to process flows on behalf of the group rather than as a deployment of the QFZP’s balance sheet.

The “advisory” element is harder to assimilate into for-own-account treatment. Providing risk advice to a non-Related Party almost inevitably entails a client-service capacity. Only where advisory is strictly ancillary to the QFZP’s own hedging can it be characterized as proprietary. For example, a QFZP negotiating a liquidity-management transaction with an independent counterparty might, in the course of persuading the counterparty to accept the proposed structure, share market views or investment arguments. In substance, these comments serve the QFZP’s own objective of closing the deal and managing its own balance sheet.

Should the treatment of such an advise change once the QFZP begins to separately charge a fee for that advice? At this moment, this activity takes on the character of a client-facing advisory service, but simultaneously it serves “own account” needs.

In our view, in such cases, it may be more appropriate to apply the ancillary activity limb under Articles 2(1)(n) and 2(3)(f). These provisions allow functions that are necessary or minor but closely related to a Qualifying Activity to be treated as part of that activity, rather than as a separate service line. Thus, advisory elements inseparably linked to proprietary hedging or liquidity management could still be brought within the qualifying perimeter, but only insofar as they remain ancillary rather than constituting an independent advisory business.

This contrast between activities that can plausibly straddle both limbs and those that are structurally confined to one or the other underscores the need for a functional test. In practice:

Financing and liquidity management may operate in both proprietary and service-center modes, depending on whether the QFZP acts for its own investment purpose or in response to group needs.

Risk management is primarily proprietary when limited to hedging the QFZP’s own exposures, but the advisory component tends to shift it into service-based territory unless it remains strictly ancillary.

• Debt management and centralized payment and collection are, by their nature, almost always service functions once extended beyond the QFZP’s own balance sheet.

This functional differentiation highlights the divergence within the statutory list:

• some functions naturally lend themselves to own-account treatment,
• while others cannot easily be detached from a client-service capacity.

Real life, however, may prove broader than legislative expectation. It is not inconceivable that rare cases might arise where even advisory or fund-management services to non-Related Parties could be framed as proprietary, though at present concrete examples remain elusive.

The disclaimer

Pursuant to the MoF’s press-release issued on 19 May 2023 “a number of posts circulating on social media and other platforms that are issued by private parties, contain inaccurate and unreliable interpretations and analyses of Corporate Tax”.

The Ministry issued a reminder that official sources of information on Federal Taxes in the UAE are the MoF and FTA only. Therefore, analyses that are not based on official publications by the MoF and FTA, or have not been commissioned by them, are unreliable and may contain misleading interpretations of the law. See the full press release here.

You should factor this in when dealing with this article as well. It is not commissioned by the MoF or FTA. The interpretation, conclusions, proposals, surmises, guesswork, etc., it comprises have the status of the author’s opinion only. Furthermore, it is not legal or tax advice. Like any human job, it may contain inaccuracies and mistakes that I have tried my best to avoid. If you find any inaccuracies or errors, please let me know so that I can make corrections.