UAE: New conditions announced for corporate tax exemptions

The diversity of ownership criteria for investment funds other than REITs will be non-binding for the first two financial years of the fund's establishment, says the ministry

By WAM

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Published: Sat 29 Jul 2023, 8:11 PM

Last updated: Sun 30 Jul 2023, 6:07 PM

A new Cabinet decision outlines additional conditions for investment funds' exemptions from the UAE's corporate tax, the Ministry of Finance (MoF) announced on Saturday.

According to the Cabinet decision, these exemption conditions for investment funds, other than Real Estate Investment Trusts (REITs), include:

Being primarily engaged in investment business activities, with ancillary or incidental activities not exceeding 5 percent of their total annual revenue
The share of ownership interests in the investment fund held by a single investor and its related parties not exceeding 30 percent or 50 percent, depending on the number of investors in the investment fund
Being overseen by an investment manager employing a minimum of three investment professionals
Day-to-day management of the fund not being controlled by investors

To ensure the flexibility of the corporate tax system, the diversity of ownership criteria for investment funds other than REITs will be non-binding for the first two financial years of the fund's establishment, provided that the intent to diversify its ownership after the first two financial years is substantiated, the ministry said.

Regarding REITs, the exemption conditions include:

The necessity for real estate assets, excluding land held by the REIT, to exceed Dh100 million in value
A minimum of 20 percent of its share capital being publicly listed or wholly owned by two or more institutional investors
An average real estate asset percentage of at least 70 percent maintained annually

Younis Haji Al Khoori, undersecretary of the MoF, said: "The additional conditions set forth through this new Cabinet Decision are clear and simple to apply, and serves the UAE to retain its position as a leading investment hub."

All Cabinet and ministerial decisions and more information relating to the Corporate Tax Law can be viewed at https://mof.gov.ae/tax-legislation/.

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