The United Arab Emirates continues to enhance its appeal to global investors through tax benefits for investment funds. The Ministry of Finance recently introduced new regulations designed to support economic development and attract fresh capital.
These rules focus on Qualifying Investment Funds (QIFs) and specific limited partnerships. The government aims to offer more clarity, fairness, and global alignment. As a result, investors can enjoy a more predictable and rewarding investment environment.
Under these regulations, investors in QIFs will benefit from tax benefits for investment funds. They must meet two main conditions: real estate assets should not exceed 10% of total investments, and the fund must maintain diverse ownership.
To offer flexibility, the UAE allows QIFs a grace period. If the ownership condition is breached, the fund has time to fix it. This period must not exceed 90 total days in a year. The rule does not apply during fund liquidation.
In case of a breach, only the investor causing the issue will lose the tax benefit. Other compliant investors will remain eligible. This ensures fairer treatment and protects most stakeholders in the fund.
Additionally, if a QIF crosses the 10% real estate limit, only 80% of its property income will be taxed. This mirrors the treatment given to Real Estate Investment Trusts (REITs) in the UAE.
Foreign investors in REITs and QIFs also benefit. If they distribute 80% of the income within nine months after the financial year ends, they only need to register for tax on the dividend date. This reduces administrative work.
Furthermore, some limited partnerships can now apply for tax-transparent status. This change aligns UAE practices with global tax systems and strengthens investor trust.
These updates highlight the UAE’s focus on creating a smooth, investor-friendly environment. The country remains committed to tax benefits for investment funds and continues to build confidence among local and international investors.
