MoF announces new cabinet decision setting additional conditions for investment funds’ exemption from corporate tax

MoF announces new cabinet decision setting additional conditions for investment funds’ exemption from corporate tax

ABU DHABI, 29th July, 2023 (WAM) -- The UAE Ministry of Finance (MoF) today announced Cabinet Decision No. (81) of 2023, outlining additional conditions for Qualifying Investment Funds under the Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses. The Cabinet Decision stipulates additional conditions that investment funds must meet to be treated as a Qualifying Investment Fund and be exempt from Corporate Tax. The decision upholds the integrity of the Corporate Tax system, while bolstering the UAE’s competitiveness as an investment hub.

According to the Cabinet Decision, the additional conditions for investment funds, other than Real Estate Investment Trusts (REITs), to be exempt from Corporate Tax, 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; and the day-to-day management of the fund not being controlled by investors.

To ensure the flexibility of the Corporate Tax system,