A decision allows a preferential tax treatment for “real estate funds” investors

The Ministry of Finance announced the issuance of Cabinet Resolution No. (34) of 2025 regarding qualified investment funds and limited partnerships qualified for the purposes of the decree of a federal law No. (47) of 2022 regarding the tax and business tax, which replaced the provisions of Cabinet Resolution No. (81) of 2023.

The ministry stated in a statement that the new decision aims to support the position of the UAE as an investment center, and to attract more investments that contribute to the growth of the national economy.

The Ministry pointed out that one of the most prominent provisions of the new decision is to develop preferred 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 property specified property is not exceeded (10%), or not to prejudice the conditions of diversity of property.

flexibility

The new decision gives more flexibility, as it gives the “qualified investment fund” a grace period even after two years from the date of its establishment, which allows it to address any violation 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 affect only 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, and that any violation of the real estate ownership by the qualified investment fund will lead to the submission of (80%) only of the income of real estate achieved through The Fund for Corporate Tax in the UAE. Investors in real estate investment funds will be subject to only (80%) of income from real estate achieved through the Real Estate Investment Fund. The Ministry affirmed that 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 (which 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 also 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 “Finance” stressed that the decision reflects the commitment of the UAE government to provide an assistant and flexible investment environment that facilitates the requirements of compliance with investors, in order to enhance the state’s position as a pioneering center for investment.

. That is, a breach of the requirements of “diversity of property” will only affect the investor responsible for breach, and this will not result in the loss of the fund for its status.