The Ministry of Finance has issued Cabinet Decision No. 34 of 2025 on Qualifying Investment Funds (QIFs) and Qualifying Limited Partnerships (QLPs) under Federal Decree-Law No. 47 of 2022 on Corporate Taxation. Replacing Cabinet Decision No. 81 of 2023, the new decision supports efforts to attract investment and boost economic growth.

A key update is the introduction of favorable tax treatment—income earned by investors from a Qualifying Investment Fund will be exempt from UAE Corporate Tax, provided the 10% real estate asset threshold or diversity of ownership conditions are not breached.

The decision introduces greater flexibility by allowing Qualifying Investment Funds (QIFs) a grace period after their first two years of operation to address breaches of the ownership diversity requirements—provided such breaches do not exceed ninety days in a year or occur during the fund’s liquidation or termination.

It also specifies that breaches of the diversity of ownership rules will affect only the investors responsible, not the entire fund. The fund will retain its QIF status if the exemption conditions are otherwise met. If the real estate asset threshold is breached, only 80% of the related income will be subject to UAE Corporate Tax. The same rule applies to investors in Real Estate Investment Trusts (REITs), in line with UAE regulatory requirements.

Foreign investors in REITs and QIFs that distribute at least 80% of their income within nine months of the financial year-end will only need to register for Corporate Tax when the dividend is distributed, simplifying compliance requirements.

The decision also enables certain limited partnerships to qualify for tax-transparent status, aligning the UAE with international standards and reinforcing its position as a global investment hub.