VARA as a “Competent Authority” for UAE Free Zone Corporate Tax: the opening for Dubai virtual-asset wealth managers and the unresolved family-office edge case

The doctrinal hinge: why “regulatory oversight” matters in Article 2(1)(g)–(h)

1. Ministerial Decision No. 229 lists “Fund management services” and “Wealth and investment management services” as Qualifying Activities, but immediately conditions both on being regulated: each definition ends with the requirement that the services are “subject to the regulatory oversight of the Competent Authority in the State”.

2. Separately, the Decision defines “Competent Authority” as the Central Bank, DFSA, FSRA, SCA, “or any other entity as determined by the Minister”. The drafting technique is telling: the list is not closed; it anticipates future insertions.

3. It also matters that the “transactions with natural persons” excluded-activity rule contains an internal exception: transactions with natural persons are excluded except where they are “in relation to” certain Qualifying Activities, including wealth and investment management services. This carve-out is an explicit acknowledgement that wealth management is often delivered to individuals and is not, for that reason alone, to be treated as disqualifying.

4. In other words, the legislature’s gatekeeper is not “individual clients vs corporate clients”; it is regulation.

What Ministerial Decision 336/2025 actually does (and does not do)

5. The Ministry of Finance announcement (11 February 2026)[1] states, in plain terms, that Ministerial Decision No. 336 of 2025 adds VARA to the definition of the “competent authority” set out in Ministerial Decision No. 229 of 2025, and that VARA is a competent authority for Qualifying Activities related to fund management services and wealth and investment management services.

6. This is a federal tax move, not a Dubai regulatory It does not expand VARA’s jurisdiction. It only recognizes that, where VARA already regulates an activity, that regulation is now sufficient to satisfy the Corporate Tax “regulatory oversight” condition.

7. So the amendment does two things at once:

• it removes mismatch for Dubai virtual-asset wealth managers outside DIFC; and
• it invites a second-order question: now that VARA is recognised as a Competent Authority, can structures that were previously outside the recognised regulatory perimeter (and therefore could not satisfy Article 2(1)(h)) enter that perimeter in a controlled manner (by carrying on activities that VARA regulates), and will that regulatory status be respected when determining whether their income arises from a Qualifying Activity for Free Zone Corporate Tax purposes?

[1] https://mof.gov.ae/en/news/ministry-of-finance-announces-issuance-of-ministerial-decision-on-the-designation-of-virtual-assets-regulatory-authority-in-dubai/

When is an entity “subject to VARA oversight” in the relevant sense?

8. Dubai Law No. 4 of 28 February 2022 applies throughout the Emirate, “including special development and free zones, excluding the Dubai International Financial Centre”.[1] It is therefore the natural regulatory home for virtual-asset activities conducted in mainland Dubai and in Dubai free zones other than DIFC.

9. VARA’s own licensing framework is drafted as a general prohibition: no entity may “carry out any Virtual Asset Activity by way of business” in Dubai unless it has obtained a VARA license (subject to transitional and other specific provisions).[2]

10. The FTA’s Free Zone Guide No. CTGFZP1 frames the family-office question through two paired illustrations:

• In the Single Family Office example,[3] the vehicle provides wealth family-office services to one family but is not subject to oversight of a Competent Authority, and the guide therefore treats it as not carrying on a Qualifying Activity.
• In the Multi Family Office example,[4] the provider performs similar services, but because it is regulated by a Competent Authority, the guide treats it as carrying on wealth and investment management services and therefore as potentially within the Qualifying Activity perimeter.

The conceptual hinge is thus not the “family” label as such, but the existence of recognised regulatory oversight.

11. Against the backdrop of new Decision No. 336, the “Company R” scenario becomes relevant. Consider a Free Zone Person established to manage the investments of individuals and legal entities in virtual assets. The critical definitional point is that VARA treats portfolio-style management performed for others as a regulated Virtual Asset Activity. In Schedule 1, “Management and Investment Services” covers taking responsibility for the “management, administration or control” of another entity’s virtual-asset portfolio, including acting as agent or fiduciary and managing on behalf of another entity.[5]

12. For the “Company R” fact pattern (a Free Zone Person established to exclusively manage the financial and personal needs of a single family in virtual assets) the critical definitional point is that VARA treats portfolio-style management performed for others as a Virtual Asset Activity. In Schedule 1, “Management and Investment Services” covers taking responsibility for the “management, administration or control” of another entity’s virtual-asset portfolio, including acting as agent or fiduciary and managing on behalf of another entity[6].

13. If Company R is doing that by way of business, it is difficult to characterize it as anything other than a VARA-regulated activity in substance (and therefore, post-designation, an activity capable of meeting the Corporate Tax “Competent Authority” oversight condition).

[1] Article 3.

[2] VARA Regulations 2023, Regulation III.A.1 and Regulation III.A.2.

[3] Example 72

[4] Example 73

[5] Virtual Assets and Related Activities Regulations 2023, Schedule 1, ““VA Management and Investment Services”.

[6] Virtual Assets and Related Activities Regulations 2023, Schedule 1, ““VA Management and Investment Services”.

The family office split in CTGFZP1 under VARA’s designation logic

14. 10.10 of the Guide No. CTGFZP1 is where the “family office” boundary is drawn in a way practitioners can operationalize. Again:

• In Example 72, the guide describes a single family office (Company R) providing family-office services to individual family members. The guide emphasizes that the office is not regulated by a competent authority and concludes that it “will not be engaged in any Qualifying Activities.”
• In Example 73, a multi family office provides similar services but to “multiple high net worth individuals and families” and is “regulated by a Competent Authority”; accordingly, the guide treats it as providing wealth and investment management services (a Qualifying Activity).

15. At first glance, one might read this as a “single vs multiple families” policy line. But the guide’s actual mechanism is consistent with the Ministerial Decision: regulation is doing the work. The SFO fails because it is not regulated, but the MFO succeeds because it is regulated.

16. Once VARA is recognised as a “Competent Authority” for Article 2(1)(g)–(h), the analytical question becomes sharper: if a Dubai SFO’s virtual-asset activity is of a type that VARA requires to be licensed (because it is “management and investment services” carried on “by way of business”), does the SFO still sit within the Example 72 outcome, or does it migrate to the Example 73 logic (regulated wealth management), notwithstanding that it serves only one family?

17. The texts, read strictly, pull toward migration. The guide’s stated reason for denial is the lack of regulation. The Ministerial Decision’s own structure permits wealth management to individuals. And, post-designation, VARA oversight now counts.

18. But the practical boundary condition is VARA’s “by way of business” concept: an SFO that is not in business may not need (and may not be able) to be licensed in the first place.

“By way of business” hinge and the nature of the recipient

19. In single family-office structures, two facts often travel together:

• the service is performed within a closed family perimeter; and
• the activity is not marketed to the public and may not be priced on conventional “third-party” terms.

20. The features of Business should not be conflated with the legal tests that matter.

20.1. The UAE Corporate Tax Law uses an expansive definition of “Business” (any activity conducted regularly, on an ongoing and independent basis) which can easily accommodate an internally-facing investment function as “business” for tax purposes even where it is not outwardly commercial.

20.2. VARA’s licensing trigger is different in both structure and purpose. VARA does not ask whether the activity is a “Business” in the Corporate Tax sense. It asks whether a Virtual Asset Activity is carried out “by way of business”. The general prohibition is framed accordingly: no Entity may carry out any VA Activity by way of business in the Emirate unless it is licensed (or falls within limited exceptions).

20.3. The “by way of business” limb is then expressly made a matter for VARA’s “sole and absolute discretion”, with VARA required to have regard to three factors:

• holding out (“whether the Entity holds itself out as conducting a VA Activity by way of business”);
• the regularity, scale and continuity of the activity; and
• the presence of any commercial element, such as remuneration or other commercial benefits (value) in kind.

21. This divergence matters because a single family office may be a “Business” for Corporate Tax purposes (given the breadth of that definition), yet still fall outside VARA licensing if VARA concludes that the activity is not carried out “by way of business” under Regulation A.2. Where an SFO sits outside licensing on that basis, it cannot invoke VARA oversight to satisfy the condition in Article 2(1)(h) that wealth and investment management services must be subject to the regulatory oversight of a Competent Authority because, on the facts, there is no such oversight to invoke.

22. Conversely, where the family office is intentionally structured as a service provider:

• with a management agreement, governance and mandates, and
• an ongoing discretionary management function performed for a family holding vehicle or for individual family members,

the VARA factors begin to align with a “by way of business” conclusion.

23. In particular, factor (c) will often be present even in a closed family perimeter:

• cost allocations,
• management fees,
• performance-linked remuneration, or
• other economic benefits
• can constitute a “commercial element” in VARA’s sense.

And where the activity is not episodic but involves continuing portfolio decisions (rebalancing, staking decisions, trading strategy, custody instructions), factor (b) - regularity, scale and continuity - is also likely to be engaged.

24. Critically, none of these VARA factors requires that services be provided to multiple families. The perimeter is drawn by the character of the conduct, not by the number of family groups served.

25. The resulting tension is therefore not merely academic:

• From a regulatory perspective, falling within VARA licensing brings supervisory burden and compliance cost.
• From a Corporate Tax perspective, once VARA is recognised as a Competent Authority, VARA licensing can satisfy the regulatory-oversight limb embedded in Article 2(1)(h).

The responsible position is not “SFOs can now get 0%”. It is narrower and more rigorous:

• VARA’s designation makes the regulatory-oversight condition capable of being satisfied for Dubai virtual-asset wealth managers outside DIFC; but
• whether a single-family vehicle benefits depends first on whether VARA, in its discretion, would treat the relevant VA activity as conducted “by way of business”.

Three structuring thoughts

26. First, a “family office” may, on the facts, be nothing more than a proprietary investor: it manages and trades its own virtual assets and does not assume responsibility for the assets of another person or entity. In that case, it is difficult to characterise its activity as “wealth and investment management services” within Article 2(1)(h). It is simply investing on its own account. This does not automatically exclude the structure from the 0% regime. Rather, the correct analysis may shift away from Article 2(1)(h) and toward other Qualifying Activity pathways, including the treatment contemplated under Articles 2(1)(d) and 2(3)(d), which can also support 0% treatment but under a different set of conditions and boundary tests. The Free Zone regime therefore requires classification by reference to the true character of the income-generating activity, not by the label “family office” or by an attempt to fit an investment-holding profile into a regulated-services category.

27. Second, where the office manages the virtual assets of single family members (or family investment vehicles) under discretionary mandates, it is at least arguable that VARA licensing is required and obtained. If that is correct, the old “SFO = not regulated” premise reflected in the FTA’s Example 72 ceases to be true as a matter of fact. The point is not that one structure is “the answer.” The point is that VARA’s designation converts what used to be a dead end (a regulator not recognised in the corporate tax definition of “Competent Authority”) into a live design choice. That choice must be taken with full awareness that tax eligibility and the regulatory perimeter have become coupled.

28. Third, where the company’s strategic objective is to rely on the “regulated wealth management” pathway in order to pursue 0% treatment, it must treat the VARA licensing threshold as a structuring constraint, not merely as an administrative step. VARA’s framework does not license activities merely because they are described as “management”. It licenses Virtual Asset Activities carried on “by way of business,” and VARA expressly reserves sole and absolute discretion to determine whether that test is met.

Accordingly, if an entity intends to build its corporate tax position on the proposition that its activity is “subject to the regulatory oversight of a Competent Authority,” it must be able to demonstrate (through governance, contractual architecture, and operational evidence) that these factors are genuinely engaged, and that the entity’s documentation and conduct are coherent with the regulated-business character being asserted. In practice, this means that the structure and paperwork placed before VARA (mandate agreements, scope of discretion, fee mechanics or other economic benefit, internal policies, decision logs, execution (custody) arrangements, and compliance controls) must be drafted and implemented so that the “by way of business” analysis is satisfied on the facts. The licensing application, in other words, becomes part of the evidentiary record that will later support the claim that the activity falls within Article 2(1)(h).

Boundary reminders that matter in practice

29. Two closing reminders anchor the analysis.

29.1. VARA’s designation is Dubai-specific, but the underlying question is regime-wide. DIFC remains outside VARA’s territorial scope, so DIFC entities fall within the DFSA perimeter rather than VARA’s.

The same methodological point applies to ADGM: ADGM entities are regulated by FSRA, not VARA.

The designation of VARA therefore does not “move” DIFC or ADGM structures into the VARA regime. Instead, it invites a parallel check for SFOs operating in those centers: where the activity is virtual-asset-related, one must examine:

• whether the relevant competent authority (DFSA in DIFC; FSRA in ADGM) in fact governs the particular virtual-asset activity being undertaken, and
• whether the SFO is, on the facts, subject to that recognised regulatory oversight.

Only after that perimeter question is answered does the analysis in this article become fully engaged.

29.2. “Wealth management” and “Way of Business” are not the label tests. Neither Free Zone Corporate Tax nor VARA license are granted merely because an activity is described as wealth management or business. The drafting repeatedly forces a substantive inquiry rather than form.

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.