Abu Dhabi: The Ministry of Finance has announced the issuance of Cabinet Decision No. 34 of 2025 on Qualifying Investment Funds and Qualifying Limited Partnerships, replacing Cabinet Decision No. 81 of 2023. This new decision aligns with Federal Decree-Law No. 47 of 2022 concerning the taxation of corporations and businesses in the United Arab Emirates, aiming to attract investments and bolster the national economy.
According to Emirates News Agency, the crucial provisions of the decision include introducing favorable tax treatments for investors. Income derived from a Qualifying Investment Fund will not be subject to UAE Corporate Tax, provided the real estate asset threshold (10%) or ownership diversity conditions remain intact. The decision also offers flexibility by granting Qualifying Investment Funds a grace period to address any breaches in ownership diversity, as long as these breaches do not exceed ninety days annually or occur during the fund's liquidation or termination.
The new decision further refines the tax framework by stipulating that breaches in ownership diversity impact only the responsible investors without disqualifying the fund as a QIF, provided exemption conditions are met. Additionally, breaches of the real estate asset threshold result in only 80% of the real estate income being taxed. For Real Estate Investment Trusts (REITs), investors will also be taxed on 80% of the real estate income, ensuring regulatory consistency across tax frameworks in the UAE.
Foreign juridical investors in REITs and QIFs distributing 80% or more of their income within nine months of the financial year-end are required to register for Corporate Tax only upon dividend distribution, easing compliance and administrative tasks for foreign investors.
Furthermore, the decision introduces a provision for certain limited partnerships to qualify for effective tax-transparent status if they meet specific conditions, promoting global best practices in taxation for such partnership structures.
This decision underscores the UAE government's dedication to fostering an attractive investment climate by simplifying compliance requirements and enhancing flexibility, reinforcing the nation's status as a premier investment destination.