UAE revises treatment of Unincorporated Partnerships, Foreign Partnerships and Family Foundations

The UAE Ministry of Finance published, on 28 October 2024, Ministerial Decision No. 261 of 2024 on Unincorporated Partnerships, Foreign Partnerships and Family Foundations for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments.

It repeals Ministerial Decision No 127 of 2023 and will apply for tax periods commencing on or after 1 June 2023.

The updated Ministerial Decision primarily reduces compliance requirements for unincorporated partnerships by eliminating the obligation to notify the Federal Tax Authority (FTA) within 20 business days of any changes to partnership composition, such as new partners joining or existing partners departing.

It also clarifies that foreign partnerships will be treated as tax transparent in the UAE if they are treated as such in their home jurisdiction, removing the need for individual partners to separately verify their tax status to the FTA.

The Decision further grants a juridical person within a family foundation the option to apply for tax transparent status. This measure enhances tax advantages for Family Foundations holding assets within the UAE, aligning family foundation benefits with the UAE Corporate Tax framework.

“The amendment to this decision reflects the UAE’s Corporate Tax regime flexibility to provide certainty to taxable persons and sustain confidence in the UAE’s competitive business environment,” said Younis Haji Al Khoori, Under-Secretary of the Ministry of Finance. “Specifically, this approach aims to ease compliance burdens on taxpayers and to reinforce the UAE’s position as a leading global hub for business and investment.”