On November 18, 2024, the UAE Ministry of Finance (MoF) introduced an important amendment to Ministerial Decision No. (261) of 2024, affecting the tax remedy of unincorporated partnerships, overseas partnerships, and family foundations below Federal Decree-Law No.47 of 2022 on corporate tax. These adjustments are intended to simplify compliance, offer administrative relief, and enhance the tax advantages for qualifying entities, thereby reinforcing the UAE’s recognition as a competitive and business -friendly enterprise.
Key Highlights of the Amendments
The revised Ministerial Decision includes the following major changes:
| Category | Key Amendment | Impact |
| Unincorporated Partnerships | Removed the requirement to notify the Federal Tax Authority (FTA) within 20 business days of partner composition changes. | Reduces administrative burden and simplifies compliance for partnerships. |
| Foreign Partnerships | Foreign partnerships will be classified as tax transparent if recognized as such in their home jurisdiction. | Eliminates the need for individual partners to verify their tax status with the FTA. |
| Family Foundations | Juridical persons within family foundations can now apply for tax transparent status in the UAE. | Enhances tax advantages for family foundations managing assets in the UAE. |
- Unincorporated Partnerships
The change alleviates compliance burdens for unincorporated partnerships via means of putting off the responsibility to inform the FTA of approximately adjustments in partnership composition.
Old Requirement vs. New Amendment
| Requirement | Before Amendment | After Amendment |
| Notification of Composition Changes | Notify FTA within 20 business days of any partner change. | No notification required for such changes. |
This change allows partnerships to focus more on operations rather than compliance.
- Foreign Partnerships
Foreign partnerships running within the UAE at the moment are diagnosed as tax-obvious in the event that they maintain this fame of their domestic country.
Simplification of Tax Transparency
| Aspect | Before Amendment | After Amendment |
| Tax Transparency Verification | Individual partners had to verify their tax status with the FTA. | Automatically recognized based on home jurisdiction’s classification. |
This adjustment simplifies tax obligations, enhancing operational efficiency for foreign partnerships.
- Family Foundations
The up-to-date decision aligns tax advantages for family foundations with broader UAE company tax policies, permitting juridical persons inside those foundations to use for tax-obvious status.
Benefits for Family Foundations
| Feature | Before Amendment | After Amendment |
| Eligibility for Tax Transparency | Family foundations could not apply for tax transparency. | Juridical persons within family foundations can now opt for tax transparency. |
This change complements the enchantment of family foundations as powerful vehicle for asset control and wealth preservation.
Strategic Implications for Businesses
Key Advantages
- Reduced Compliance Burden: Fewer notifications and documentation streamline operations.
- Enhanced Tax Transparency: A simplified class system improves performance for overseas partnerships.
- Stronger Support for Family Foundations: Increased tax benefits promote the family foundations for generational wealth-management.
Sectoral Impact
- Domestic Partnerships: Improved efficiency with reduced reporting obligations.
- Foreign Investors: Greater certainty and reduced administrative complexities.
- Family-Owned Businesses: Enhanced tax benefits align closely with UAE corporate tax policies.
The amendments to Ministerial Decision No. (261) of 2024 mirror the UAE’s dedication to growing a flexible, commercial enterprise-pleasant company tax environment. By simplifying compliance and improving tax transparency, those updates open new avenues for partnerships, overseas entities, and family owned business-groups to flourish within the UAE.
For personalized guidance on how those updates might also additionally affect your commercial enterprise, don’t forget to reach out to our tax professionals today.
ebs Chartered Accountants can help groups navigate the complexities of the brand-new UAE company tax guidelines by offering professional guidance on compliance, registration, and tax-submitting processes. Their skilled group can also assist in optimizing economic techniques to maximize tax advantages and make sure correct accounting practices are tailor-made to the precise demands of every commercial enterprise.
FAQs
What is the MoF’s recent decision about?
It revises the tax treatment for unincorporated partnerships, foreign partnerships, and family foundations.
When was the new decision announced?
The revised decision was issued in November 2024.
Who does this update affect?
The update impacts businesses involved in unincorporated and foreign partnerships, as well as family foundations.
What is the significance of this change?
It aligns the UAE’s corporate tax policies with international standards for partnership structures.