UAE, 20 June, 2025 : The Federal Tax Authority (FTA) has released a new Corporate Tax Guide detailing the tax treatment of Family Foundations, trusts, and similar structures in the UAE. The guide clarifies how these entities and their beneficiaries are treated under the UAE Corporate Tax (CT) Law and outlines the process to qualify for fiscally transparent status.
Under the new guidance, Family Foundations, incorporated trusts, and awqaf with separate legal personality may apply to be treated as Unincorporated Partnerships, making them exempt from CT in their own right if certain conditions are met. Unincorporated trusts are considered fiscally transparent by default.
The guide outlines five key conditions under Article 17(1) of the CT Law for a Family Foundation to qualify: the beneficiary condition, principal activity condition, no business activity, no tax avoidance, and distribution condition. Notably, beneficiaries do not need to be family-related and may benefit indirectly via fiscally transparent entities.
Foundations and entities wholly owned by them must register for CT and may apply to be treated as fiscally transparent. A new Annual Confirmation requirement is also introduced, due within nine months of the end of the tax period.
The guidance confirms that foreign foundations and entities may qualify, broadening its application beyond the UAE. The FTA’s guide aims to enhance compliance, support proper tax planning, and strengthen the transparency of family wealth structures in line with UAE tax regulations.
Source : www.pwc.com
