The Ministry of Finance has announced updates to Ministerial Decision No. (261) of 2024, which focuses on simplifying tax regulations for unincorporated partnerships, foreign partnerships, and family foundations.
These amendments are in accordance with Federal Decree-Law No. 47 of 2022 concerning the Taxation of Corporations and Businesses, along with its subsequent modifications. The revised decision, effective for tax periods commencing on or after June 1, 2023, introduces several measures intended to alleviate administrative burdens and augment tax advantages for the entities in question.
A notable change reduces the compliance obligations for unincorporated partnerships by eliminating the requirement to inform the Federal Tax Authority (FTA) within 20 business days of any alterations in partnership structure, such as the addition or departure of partners. Furthermore, foreign partnerships will now be recognized as tax transparent in the UAE if they are treated similarly in their respective home countries, thereby eliminating the need for individual partners to confirm their tax status with the FTA and streamlining processes for international enterprises.
In a significant development, the amendments also permit family foundations holding assets in the UAE to apply for tax-transparent status. This update offers additional tax benefits to family foundations, aligning them with the UAE’s Corporate Tax framework and reinforcing their importance in wealth management.
Commenting on these reforms, Younis Haji AlKhoori, Undersecretary of the Ministry of Finance, emphasized: “The modification to this decision underscores the UAE's Corporate Tax regime's adaptability to offer clarity to taxable individuals and maintain confidence in the UAE's robust business environment. This approach specifically aims to reduce compliance pressures on taxpayers and further solidify the UAE’s status as a premier global hub for business and investment.”
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