Cabinet Decision No. (81) of 2023

In brief

In July 2023, the Ministry of Finance (‘MoF’) in United Arab Emirates (‘UAE’) published Cabinet Decision No. (81) of 2023 (‘Cabinet Decision’) outlining the additional conditions to be met by the Qualifying investment Funds (‘QIF’) in order to be exempt from corporate tax.

A QIF is an Investment Fund (‘IF’) where the following conditions are met in accordance with Article 10 of the Corporate Tax Law:
a) the IF or the IF’s manager is subject to the regulatory oversight of a competent authority in the UAE, or a foreign jurisdiction;
b) interests in the IF are traded on a recognized stock exchange, or are marketed and made available sufficiently widely to investors;
c) the main purpose of the IF is not to avoid CT.

According to the Cabinet Decision, the additional conditions for the investment funds (other than Real Estate Investment Trusts (‘REITs’)) to be exempted from Corporate Tax include the following:

  • The fund is to be primarily engaged in investment business activities, with ancillary or incidental activities not exceeding 5 percent of its total annual revenue.
  • The share of ownership interests in the investment fund held by a single investor and its related parties do not exceed 30 percent (where the fund has less than ten investors) or 50 percent (where the fund has ten or more investors), in the investment fund. Further, the aforesaid condition shall be deemed to be satisfied for the first two financial years and shall be non-binding post the first two financial years provided that the same may be substantiated.
  • It is overseen by an investment manager employing a minimum of three investment professionals. and 
  • The day-to-day management of the fund is not being controlled by investors.

Given the above, where the QIF does not meet the conditions on the share of ownership interests or provide sufficient evidence to abide by those conditions, then the QIF shall cease to be exempt under the UAE CT Law.

Regarding REITs, in addition to the general conditions established in the CT Law for QIFs detailed above, the additional exemption conditions include the following:

  • Real estate assets, excluding land held by the REIT, to exceed AED100 million in value;
  • A minimum of 20% of its share capital is publicly listed or wholly owned by two or more institutional investors (provided under Article 5 of this cabinet decision), such as the federal or local government, government entity or government controlled entity, foreign government, bank, insurance provider, pension or social security funds, etc.; and
  • An average real estate asset percentage of at least 70% is maintained annually.

Cabinet Decision No. (75) of 2023

The UAE MoF has also published Cabinet Decision No. (75) of 2023 outlining the administrative penalties for violations of the UAE CT Law. Administrative penalties shall be imposed in case of failure to maintain records and other information as specified, failure to submit a tax return within the timeframe, failure to settle the payable tax etc. The list of activities on which penalty shall be imposed has been annexed to Cabinet Decision No. (75) of 2023: to read more, click here.

How KPMG can help you and your business

KPMG has a team of experienced tax specialists that can help you assess your current tax position, advise on the appropriate tax treatment, prepare clarification requests, or represent you in front of the Federal Tax Authority (‘FTA’) as registered tax agents, answer and accompany you on any CT and related tax query that may arise in the context of your day-to-day business.

We are happy to discuss your specific circumstances with you and determine the way forward should you have any questions or concerns in this regard. Please get in touch with your usual KPMG contact or any of the tax professionals below.


Wassim Chahine

Partner, Corporate Tax

Nadia Batiukova

Director, Corporate Tax

Hassan Fadda

Director, Corporate Tax