The UAE Ministry of Finance has launched new tax regulations exempting corporate taxes for Qualifying Investment Funds (QIFs) and specific limited partnerships.

Income received by QIFs will be exempt from UAE Corporate Tax under the new regulations, provided certain conditions are fulfilled, such as a maximum 10 percent limit on real estate assets and adherence to requirements of diversity in ownership.

The legislation provides QIFs a grace period to cure ownership diversity violations after the first two-year qualification period. These breaches, however, should not exceed 90 cumulative days in each year and should not occur during liquidation.

If ownership diversity conditions are violated, the exemption is lost only for the non-compliant investors, provided the fund meets all other criteria. Additionally, if a QIF exceeds the 10% real estate threshold, only 80% of its real estate income becomes taxable.

For foreign juridical investors in REITs and QIFs, those that meet defined conditions and distribute at least 80% of income within nine months after the financial year-end will only be required to register for Corporate Tax at the time of dividend distribution.

The update also allows certain limited partnerships to obtain tax-transparent status, aligning the UAE’s tax framework with international standards.