UAE Corporate Tax: Ministerial Decision 261/2024 on Partnerships & Family Foundations

10 March 2025

Shuchi Goel

Effective Date: 1 June 2023 the - UAE corporate tax regulations address unincorporated partnerships, foreign partnerships, and family foundations. Ministerial Decision No. 261 of 2024 provides clarification on the corporate tax treatment of these entities. Both the partners and the partnership itself are subject to UAE Corporate Tax.

Dubai: Ministerial Decision No. 261 of 2024 clarifies how unincorporated partnerships, foreign partnerships and family foundations are treated under Federal Decree-Law No. 47 of 2022 (UAE Corporate Tax Law), replacing Decision 127/2023.

1.       . Key Highlights

• Unincorporated Partnerships

– Not taxable unless they elect and FTA-approve taxable-person status (irrevocable except in rare cases).

– Responsible partners must disclose structural changes in annual returns.

• Foreign Partnerships

– Exempt if taxed in their home jurisdiction; otherwise each partner reports and pays tax on its share.

– Annual FTA declaration required to confirm home-jurisdiction tax status.

• Family Foundations

– May elect to be treated as unincorporated partnerships if beneficiaries are public-benefit entities.

– Must distribute any taxable income within six months of year-end or ensure beneficiaries themselves are tax-exempt.

– Wholly owned subsidiary juridical persons can likewise opt in, subject to FTA approval.

2.       Compliance Implications

• Review entity structures and decide whether to apply for taxable-person status.

• Prepare and file any required applications or annual declarations with the FTA.

• Ensure timely distribution of foundation income or confirm beneficiary tax-exempt status to avoid hidden liabilities.

ALKETBI TOUCH

Our Corporate Tax team can:

– Advise on whether and how to elect taxable-person treatment;

– Draft and submit FTA applications and declarations;

– Structure partnerships and foundations for optimal tax efficiency;

– Update internal policies and accounting processes to ensure ongoing compliance.

Please feel free to contact us for a tailored review of your partnership or foundation arrangements under Decision 261/2024 and to develop a compliant corporate-tax strategy.