Dubai: The UAE Ministry of Finance has announced new regulations for Qualifying Investment Funds (QIFs) and Qualifying Limited Partnerships to boost economic growth by attracting more investments.
Preferential Tax treatment for investors
Investors in QIFs will benefit from a favorable tax regime, with income exempt from UAE Corporate Tax as long as the real estate asset threshold (10 per cent) and ownership diversity conditions are met.
Increased flexibility for QIFs
The new decision provides QIFs with a grace period to rectify breaches in ownership diversity beyond the initial two years, provided these breaches don’t exceed 90 cumulative days annually or occur during liquidation.
Fairer enforcement and real estate income taxation
Violations of ownership diversity will only impact the breaching investors, not the entire fund, given other exemption criteria are satisfied. If a QIF exceeds the real estate asset threshold, only 80 per cent of its real estate income will be taxed, aligning with the treatment of Real Estate Investment Trusts (REITs).
Simplified administration for foreign investors
Foreign juridical investors in REITs and QIFs meeting specified conditions and distributing 80 per cent or more of their income within nine months of the financial year-end will only need to register for Corporate Tax on the dividend distribution date, streamlining compliance.
Alignment with global tax standards
The decision introduces provisions for certain limited partnerships to obtain tax-transparent status, aligning the UAE with international best practices for taxing such structures.
Leading investment hub
This decision underscores the UAE’s commitment to creating a business-friendly environment, attracting investment, and simplifying regulatory compliance. By offering competitive tax advantages and streamlined administration, the UAE reinforces its position as a premier global investment destination.
