One: who formed your company?
On Thursday the DFSA published a decision that every company owner in the DIFC should read, and most will not. A firm licensed in the Centre as a management consultancy spent six and a half years forming companies and lending its address to them — 71 clients, and arrangements with three other free zones — without ever registering as what the law calls a designated non-financial business or profession. The regulator took back every dollar of fees it earned, charged it the registration fees it never paid, with interest, and fined it on top. The fine was the smallest part of the bill.
I have no view on the firm, and the decision speaks for itself. What interests me is the 71. Each of them has a company whose formation file was prepared, and whose customer due diligence was performed, by someone who was not supervised for doing it. Nothing in the decision says those companies did anything wrong, and in most cases they will not have. But a bank reviewing one of them next year will see the agent’s name in the file, will know what the DFSA decided, and will ask itself whether the KYC behind the account was ever done by someone who had to answer for it. The answer to that question is not in the client’s hands any more.
So the question I put to every new client this week was the simple one: who formed your company, who holds your registered address, and under what registration do they do it? In the DIFC the answer should include DFSA registration as a DNFBP. In the free zones and on the mainland it should include the relevant licence and a goAML registration with the Financial Intelligence Unit. We are a licensed trust and corporate service provider and we are registered on goAML, and I say it not to advertise but because a client is entitled to ask and should. Three of the people I asked did not know. Two found out that their administrator was a consultancy with a friendly website.
The remedy is not dramatic. Move the administration to a registered provider, have the new provider re-perform the due diligence properly rather than inherit it, and keep the correspondence that shows when and why the move was made. A company that does this before its bank asks has a story; a company that does it afterwards has an explanation, and banks treat those differently.
Two: goods that never land
An owner with companies in two free zones trades finished equipment. The goods are bought in one country and shipped to customers in another — Egypt, mostly — and never enter the UAE. The buyers use the equipment themselves; they do not resell it. An advisory firm had told him that his Ajman company was a Qualifying Free Zone Person paying corporate tax at 0 per cent, and he asked us to check the report before he relied on it for the 2025 return. He also asked a second question: if he split the business into two Ajman companies, one selling unfinished equipment to the other, and the second assembled it before selling it on, would that fix things, and did the assembly have to happen in the UAE?
The 0 per cent rate is not a property of the licence. It belongs to income from a list of qualifying activities, now set out in Ministerial Decision No. 229 of 2025, which replaced Decision No. 265 of 2023, earned by a free-zone person with adequate substance in the zone, and it survives only if the income outside that list stays under a de minimis limit of 5 per cent of revenue or AED 5 million, whichever is lower. Breach the limit and the company loses the status for that year and the four after it, and pays 9 per cent on taxable income above AED 375,000. Trading is on the list only in narrow forms. Distribution qualifies when it is carried on in or from a designated zone, when imported goods enter through that zone, and when the customer resells the goods or processes them for sale; trading qualifies when the goods are qualifying commodities — metals, minerals, industrial chemicals, energy and agricultural products with a quoted price — which finished equipment is not. Goods that never enter a designated zone, sold to end users, sit outside both. On the facts we were given, the trading income is not qualifying income, it is almost all of the company’s revenue, and the report had not engaged with either point.
The restructuring idea is better, but only if it is real. Manufacturing and processing are qualifying activities, and the decision expressly treats assembling products from components as manufacturing. The rules, however, require the core income-generating activities to be carried out in the free zone, with adequate assets, staff and costs there. An assembly line in Ajman with people on it can earn qualifying income; an assembly performed by a contractor in Egypt and invoiced through Ajman cannot, however the contracts are drafted. Yes, the assembly has to happen here, and it has to happen in the zone. Whether it is worth building a workshop to save corporate tax on this volume is a commercial question, and the honest answer may be that 9 per cent on a real margin is cheaper than a factory.
I have a rule about free-zone tax that I repeat until clients are bored of it: the zone gives you the address, the activity gives you the rate. Most of the reports I review get the address right.
Three: the second bank
A trading company in Meydan, owned by a non-resident and managed day to day by a UAE-resident manager, had its first account approved this month. The owner was pleased and asked why we were already opening a second one. The second bank asked the questions the first had asked: why the UAE, who runs the business here, where the money comes from, and what the owner’s connection is to the people who manage it. We answered them the same way, in writing, with the same documents.
The reason for the second account was in this week’s news. Washington designated two individuals living in Dubai and said that Iranian oil money is moved through Hong Kong into the UAE and Türkiye and turned into gold and cash. Brussels listed a DMCC company and an FZE. And the United States fined one of its largest banks USD 1.2 billion, in large part for relying on its foreign correspondents without checking their customers. None of this concerns our client. All of it will reach his bank, because his bank’s correspondents will ask harder questions of every account that looks like his on paper: a non-resident owner, a free-zone trading licence, cross-border flows. When a bank’s risk appetite changes, it does not consult the customer, and the exit letter gives thirty days.
Two banks, in two different groups, both kept active, both holding the same file, is not paranoia. It is the cheapest insurance a free-zone company can buy, and the premium is a second set of the same documents.
Four: the price on the screen
Clients ask me about markets more than they used to, and this week the answers were all about the difference between a quoted price and a real one. Brent futures closed the week near USD 105. The International Energy Agency noted that a physical cargo of North Sea crude was changing hands at around USD 134, and OPEC’s ministers said that shipping and insurance now cost more than a third of the value of the oil. A UAE company buying fuel or feedstock does not pay the screen. It pays the cargo, the freight and the war-risk premium, and its contracts should say so.
The same gap runs through the week’s other numbers. American consumer prices rose 3.7 per cent and producer prices 6.3, yet the ten-year Treasury yield fell, because investors were frightened of credit tied to artificial intelligence and bought safety. The IMF wrote the UAE economy down for 2026 and up for 2027, on the assumption that the Strait reopens from March, a date it has already moved once. Dubai’s property prices held while its sales halved. None of these is a contradiction. Each is a price on a screen and a reality underneath it, and the job is to know which one a decision depends on.
So, for the clients who asked where money should sit this week, the advice has not changed from last week’s, only sharpened. Keep three months of costs in the current account and the next nine in the sovereign: the Ministry of Finance auctions a new T-Sukuk maturing in 2029 on 27 October, alongside a reopened T-Bond and a small retail tranche. Price nothing off a futures screen that you will settle against a cargo. Do not treat a fall in long yields during a fright as a reason to lock in a long fixed rate. And keep the file current, because in a year like this the file is the asset that never loses value.
What the four have in common
A licence that does not authorise what the company does. An address in a free zone that does not make the income qualify. A bank account that exists until the bank decides otherwise. A price that is not the price. In every file this week the paper said one thing and the substance another, and in every case the advice was the same: act on the substance, and make the paper tell the truth about it. That is most of what a corporate service provider is for.
Mohanad Almeshal is Co-Founder and Corporate Counsel of Polaris Corporate Services, a licensed Trust and Corporate Service Provider in Ras Al Khaimah and Dubai. The cases described are real; the identifying details are not. Nothing in this article is tax or investment advice for any particular company.