An investment fund may apply to the UAE Federal Tax Authority (FTA) to be exempt from corporate tax (CT) as a “qualifying investment fund” provided the conditions prescribed in the CT law are met.

• The conditions set out in Article 10(1) of the CT law are as follows:

1. the investment fund or the investment fund’s manager is subject to the regulatory oversight of a competent authority in the UAE, or a recognized foreign competent authority (the “regulatory oversight condition”);
   1. interests in the investment fund are traded on a recognized stock exchange or are marketed and made available sufficiently widely to investors (the “fund ownership condition”); and
   1. the main or principal purpose of the investment fund is not to avoid CT (the “main purpose condition”).

• The following additional conditions for investment funds (other than real estate investment trusts “REITs”) are set out in Cabinet Decision No. 81 of 2023:

1. the main business or business activities conducted by the investment fund are investment business activities, and any other business or business activities conducted by the investment fund are ancillary or incidental (the “investment business condition”);
   1. a single investor and its related parties do not own:

• more than 30% of the ownership interests in the investment fund, where the investment fund has less than ten investors; or
  • more than 50% of the ownership interests in the investment fund, where the investment fund has ten or more investors (the “diversity of ownership condition”);

• the investment fund is managed or advised by an investment manager that has a minimum of three investment professionals (the “investment manager condition”); and
  • the investors will not have control over the day-to-day management of the investment fund (the “independence condition”).

• An investment fund entity can only apply for CT exemption after it has been registered with the FTA and obtained a tax registration number for CT purposes.

• Investors in a qualifying investment fund that are taxable persons are required to include in their income their proportional share of the amount reflected as net income available for distribution in the financial statements of the qualifying investment fund.