UAE Ministry Designates VARA Under Corporate Tax

The decision, Ministerial Decision No. (336) of 2025, amends the definition of “competent authority” contained in Ministerial Decision No. (229) of 2025, which governs which activities may qualify under Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses. As a result, certain fund management and wealth and investment management activities regulated by VARA in Dubai can now fall within the qualifying framework of the UAE’s corporate tax regime, provided they meet the required conditions. The Ministry of Finance confirmed the development in an official announcement published on its website.

The decision is presented as a clarification rather than an expansion of powers. It does not change VARA’s regulatory mandate; instead, it aligns Dubai’s virtual asset oversight with federal tax architecture, offering clearer guidance to businesses operating at the intersection of digital assets and traditional finance.

VARA itself was established under Dubai Law No. (4) of 2022 to regulate virtual asset activities within the Emirate of Dubai, excluding the Dubai International Financial Centre (DIFC), which is overseen by the Dubai Financial Services Authority (DFSA). Since its creation, VARA has been responsible for licensing and supervising virtual asset service providers (VASPs), covering activities such as custody, exchange services, broker-dealer operations, and token issuance.

Under the UAE’s federal corporate tax regime, introduced in 2023, certain entities classified as “Qualifying Free Zone Persons” may benefit from a 0 percent corporate tax rate on qualifying income, subject to strict conditions and regulatory oversight. By including VARA in the list of competent authorities, the Ministry ensures that virtual asset fund management and related financial activities supervised in Dubai can be assessed within the same tax framework as other regulated financial services.

For digital asset funds, portfolio managers, and investment firms operating in Dubai’s free zones, including jurisdictions such as the Dubai Multi Commodities Centre (DMCC) and the Dubai World Trade Centre (DWTC), the clarification reduces ambiguity. Firms that fall under VARA’s supervision and meet the corporate tax law’s qualifying criteria now have clearer guidance on how their activities will be treated under federal tax rules.

This matters in practice. As the UAE continues to position itself as a global hub for digital assets and fintech, regulatory clarity has become a competitive advantage. Institutional investors and asset managers typically assess not only licensing requirements but also tax treatment, compliance burdens, and cross-jurisdiction coordination before committing capital. Aligning emirate-level digital asset oversight with federal taxation standards removes a potential layer of uncertainty for firms evaluating the UAE as a base of operations.

The Ministry of Finance stated that the decision supports the UAE’s efforts to strengthen its position as a leading global center for financial and investment services, reinforcing a regulatory environment that balances innovation with compliance and transparency.

The designation also reflects the UAE’s broader governance model, which often combines federal legislation with emirate-level regulatory bodies tailored to specific sectors. While VARA regulates virtual assets in mainland Dubai and certain free zones, other financial centers such as the DIFC and Abu Dhabi Global Market (ADGM) maintain their own independent regulators. The recent ministerial decision does not alter these jurisdictional boundaries but ensures coherence between Dubai’s digital asset regulator and federal tax policy.

Over the past two years, VARA has developed a rulebook covering areas such as compliance requirements, market conduct, custody standards, and risk management for virtual asset service providers.. Dubai authorities have repeatedly emphasized that sustainable growth in the sector depends on regulatory safeguards that protect investors while allowing technological innovation to develop within defined parameters.

The Ministry’s move comes at a time when global regulators are tightening scrutiny of digital asset markets, particularly around taxation, cross-border compliance, and financial stability. By embedding VARA more explicitly within the federal corporate tax framework, the UAE signals that digital asset activities are being treated as an integral component of the national financial system rather than a parallel ecosystem.

Companies already licensed by VARA gain greater predictability as a result of the decision. Prospective entrants receive a clearer understanding of how regulatory approval connects with corporate tax obligations. Policymakers, meanwhile, see it as reinforcing the UAE’s strategy of developing a regulated, tax-transparent digital asset environment aimed at attracting long-term capital rather than short-term speculation.

It remains unclear how quickly the decision will translate into increased fund launches or expanded digital asset investment activity. As jurisdictions around the world continue to debate how best to regulate and tax virtual assets, the UAE’s approach reflects a deliberate effort to integrate sector-specific oversight into a unified federal framework. In a market where regulatory certainty often shapes capital flows, that alignment could prove as significant as any single licensing reform.