FinMin introduces tax relief measures for investors: The Finance Ministry has introduced a number of new amendments (pdf) that exempt Qualifying Investment Funds (QIFs) and Qualifying Limited Partnerships (QLPs) from paying corporate tax under certain conditions, with the decision aiming to “attract more investments and promote the growth of the national economy,” state news agency Wam reported.

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Remember: The 9% business tax was introduced by the Finance Ministry in June 2023.

For investment funds: Investors deriving income from QIFs will not be subject to corporate tax on the income they derive through the fund, provided that the real estate asset threshold of 10% and the diversity ownership conditions are met. Any breach of the threshold will result in only 80% of the real estate income derived through the fund being subject to corporate taxation, the statement reads.

The decision also offers QIFs a grace period that allows them to “remedy any breaches of the diversity of ownership requirements, provided such breaches do not exceed an aggregate of 90 days in a year or if they occur during the liquidation or termination of the fund.

Real estate investors will be given similar treatment: Investors who are part of a REIT will also only be subject to taxes on 80% of the real estate income derived through the REIT.

PLUS- Limited partnerships will be able to qualify for effective tax-transparent status, as long as they meet the necessary conditions.

Non-resident investors are not taxable other than in certain cases: The Finance Ministry issued a decision that clarifies that a “nexus” will be created — requiring investors to be subject to the corporate tax — for non-resident investors on the dividend distribution date if a fund breaching the real estate threshold distributes 80% or more of its income within nine months from its financial year-end, Wam reported separately. The nexus would apply from the date of ownership acquisition if the fund fails to distribute 80% of its income within that period. A violation of the diversity of ownership conditions during the tax period will also make them subject to the tax.

It’s all about creating an attractive investment environment: The decision “reflects the UAE government’s commitment to providing an attractive investment environment that is flexible and simplifies compliance requirements for investors, thereby maintaining the UAE’s status as a leading investment hub,” according to Wam.

The UAE ❤️ foreign investments: The Finance Ministry also issued amendments inNovember to ease administrative and tax compliance requirements for domestic businesses, foreign partnerships, and family foundations. These include considering foreign partnerships tax-transparent if they hold that status in their home country, allowing foreign firms to apply for tax-transparent status, and fewer requirements for reporting on partner composition. It also exempted some investment entities from the 15% domestic minimum top-up tax, while introducing a tax carve-out to offer relief through substance-based income exclusion, reducing taxable excess net income based on payroll and the carrying value of tangible assets.

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