Three of the fourteen Qualifying Activities in Ministerial Decision No. 229 of 2025 relate specifically to intra-group financial and management services: headquarter services to Related Parties, treasury and financing services, and the financing and leasing of Aircraft. Together, these provisions create a framework that allows free zone holding structures, regional headquarters, and aviation finance platforms to retain the 0% preferential rate on qualifying income — provided the activities are properly characterised and documented. Each activity carries a detailed statutory definition that draws clear boundaries around what qualifies and what does not. For a full overview of the qualifying framework, see our Free Zone Corporate Tax Eligibility service page.
Headquarter Services to Related Parties: Article 2(3)(i)
The decision defines headquarter services as: the administering, overseeing, and managing of business activities of Related Parties. The activities explicitly included are:
- Senior and general management
- Captive insurance services
- Administrative services
- Procurement services
- Business planning and development
- Risk management
- Coordination of group activities
- Incurring expenditures on behalf of Related Parties
- Providing other support services to Related Parties
This is a broad definition covering the typical range of shared services centre functions. The key limitation is the Related Party requirement: these services must be provided to Related Parties, not to third parties. A free zone entity providing the same management or administrative services to unrelated clients is not providing headquarter services within this definition, and revenue from such services does not carry qualifying character on this basis.
Importantly, headquarter services are excluded from the prohibition on transactions with natural persons in Article 2(2)(a). A qualifying free zone person can provide headquarter services to a natural person who is a Related Party without triggering the excluded activity classification.
Treasury and Financing Services: Article 2(3)(j)
Treasury and financing services to Related Parties or for the entity's own account covers:
- Cash and liquidity management
- Financing and debt management
- Financial risk management and related advisory services
- Centralised payment and collection activities
Two notable features distinguish this definition. First, the services can be provided either to Related Parties or for the entity's own account — making it possible for a free zone treasury entity managing its own balance sheet to retain qualifying income status. Second, the scope includes centralised payment and collection, which covers the common group treasury structure where a single entity manages payables and receivables for the entire corporate group.
However, treasury and financing services do not include general banking activities or regulated finance and leasing activities to third parties. These remain Excluded Activities. The distinction is that treasury services are intra-group functions, while regulated banking and lending to unrelated parties fall outside the qualifying boundary.
Financing and Leasing of Aircraft: Article 2(3)(k)
The aircraft financing and leasing qualifying activity is defined broadly to include:
- Financing and leasing of Aircraft, Aircraft engines, or rotable components
- Securitisation of the financing and leasing of Aircraft and related components
- Granting the right to use Aircraft, engines, or rotable components under a finance lease, operating lease, or other arrangement
- Related advisory and agency services for the procurement, sale, or leasing of Aircraft, engines, or rotable components
The definition covers the entire aircraft financing transaction lifecycle — from origination through securitisation through ongoing lease management. This is designed to attract and retain aircraft leasing and aviation finance platforms in UAE free zones. Unlike the commodity trading activity, the aircraft financing and leasing definition does not carry a specific revenue threshold test.
Interaction with the Excluded Activities Framework
All three activities sit in proximity to corresponding Excluded Activities. The interaction is managed through express carve-outs in Article 2(2):
- Transactions with natural persons are excluded — but headquarter services, fund management, wealth management, and aircraft financing/leasing to natural persons are carved back in.
- Finance and leasing activities are excluded — but commodity trading, ship operations, treasury/financing services, and aircraft financing/leasing are carved back in.
- Insurance activities are excluded — but reinsurance services and captive insurance within the headquarter definition are carved back in.
The carve-out structure means that the characterisation of each activity must be assessed at the transaction level, not just the category label. A free zone entity providing both qualifying and non-qualifying services must track and segregate revenue correctly.
Transfer Pricing and Documentation Requirements
Headquarter services and treasury services to Related Parties are intra-group transactions. Under the UAE Corporate Tax law, related-party transactions must be conducted at arm's length and documented accordingly. The free zone entity must maintain:
- Service agreements with Related Parties clearly defining the scope and pricing of services.
- Transfer pricing documentation demonstrating that the service fees reflect arm's-length rates.
- Revenue allocation records showing which services are provided to Related Parties versus unrelated clients.
- Treasury activity records distinguishing intra-group functions from regulated financial activities.
Frequently Asked Questions
Can a free zone entity provide management services to unrelated third parties and claim it as headquarter services?
No. Headquarter services must be provided to Related Parties. Services to unrelated parties do not fall within this qualifying activity definition and generate non-qualifying income unless another qualifying category applies.
Can a free zone entity manage its own treasury and claim qualifying income?
Yes. The decision explicitly includes treasury and financing services conducted for the entity's own account, not just for Related Parties.
Are rotable aircraft components covered by the aircraft financing qualifying activity?
Yes. The decision explicitly includes Aircraft engines and rotable components alongside the Aircraft itself within the scope of the aircraft financing and leasing qualifying activity.
Does providing captive insurance through a free zone entity qualify?
Captive insurance is specifically listed within the definition of headquarter services to Related Parties, meaning income from captive insurance arrangements within a group structure can carry qualifying character.
What is the difference between treasury services and banking activities for qualifying purposes?
Banking activities are regulated financial activities under Federal Decree-Law No. 14 of 2018 and are Excluded Activities. Treasury services are intra-group cash, liquidity, and financing management functions that are not subject to the banking regulatory framework and are not provided to unrelated third parties.
Must aircraft leasing and financing be conducted with regulated lessees to qualify?
The decision does not require the lessee or borrower to be regulated. The qualifying character of the activity depends on the nature of the transaction — financing or leasing of Aircraft, engines, or rotable components — rather than the regulatory status of the counterparty.
Last Reviewed: May 2025 | Abdelhamid & Co. — Certified Public Accountants & Auditors, Sharjah, UAE