Finance: The Cabinet’s decision regarding investment funds and qualified partnerships for the purposes of the corporate tax law
Abu Dhabi, April 5 / WAM / The Ministry of Finance announced today the issuance of Cabinet Resolution No. (34) for the year 2025 regarding qualified investment funds and limited partnerships for the purposes of the decree of Federal Law No. (47) of 2022 regarding the tax and business tax, which replaced the provisions of Cabinet Resolution No. (81) of 2023.
The new decision aims to support the UAE’s position as an investment center and attract more investments that contribute to the growth of the national economy.
One of the most prominent provisions of the new decision is the introduction of preferential tax treatment that includes the lack of investors who achieve income from a qualified investment fund for corporate tax in the UAE, in relation to their investigative income through the fund, provided that the percentage of property specified by (10%) does not exceed or not to prejudice the conditions of diversity of property.
The new decision gives more flexibility and the qualified investment fund is given to a period of grace even after two years from the date of its establishment, which allows it to address any breach of the conditions of the diversity of property, provided that the period of breach does not exceed “90” days during the year or that the breach occurs due to the liquidation of the fund or its dissolution.
The decision states, in order to enhance the tax transaction, that any violation of the requirements of the diversity of ownership will only affect the investor responsible for the breach, and this will not result in the loss of the fund to put it as a qualified investment fund, provided that the fund fulfills the conditions of relevant exemption.
Moreover, any violation of real estate ownership by the qualified investment fund will lead to only (80%) of income from real estate achieved through the fund for corporate tax in the UAE.
Investors in the real estate investment funds will be subject to only (80%) of income from real estate achieved through the Real Estate Investment Fund, and this treatment is in line with the legislation regulating real estate investment funds in the UAE, which guarantees the harmony between organizational and tax legislation.
The foreign legal person invested in real estate investment funds and qualified investment funds that meet the relevant conditions, which distribute (80%) or more of their income within nine months of the end of the fiscal year, must register for corporate tax on the date of profit distribution. This contributes to simplifying compliance procedures and reducing administrative burdens on foreign investors.
The new decision includes a ruling that allows some limited partnerships to obtain effective tax transparency, provided that they meet the necessary conditions.
This comes within the framework of the UAE’s keenness to adopt international best practices in organizing the tax treatment of this type of partnership.
The decision reflects the commitment of the UAE government to provide an auxiliary and flexible investment environment that facilitates the requirements of compliance with investors, in order to enhance the state’s position as a leading investment center.
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