DUBAI, April 5: The UAE Ministry of Finance has unveiled new regulations aimed at fostering economic growth by attracting more investments. The regulations focus on Qualifying Investment Funds (QIFs) and Qualifying Limited Partnerships, offering favorable tax incentives to boost their appeal.

Under the new rules, investors in QIFs will enjoy a favorable tax regime, with income exempt from UAE Corporate Tax, provided they meet certain conditions, including maintaining a minimum real estate asset threshold of 10% and ensuring ownership diversity.

The new framework also allows QIFs a grace period to address ownership diversity issues beyond the initial two years, as long as these breaches do not exceed 90 cumulative days per year or occur during liquidation. Notably, violations of ownership diversity will only affect the breaching investors, not the entire fund, assuming other exemption criteria are met.

If a QIF surpasses the real estate asset threshold, only 80% of its real estate income will be subject to taxation, in line with the treatment of Real Estate Investment Trusts (REITs).

Foreign juridical investors in REITs and QIFs who meet specific conditions and distribute at least 80% of their income within nine months of the financial year-end will only need to register for Corporate Tax when dividends are distributed, simplifying compliance.

The regulations also allow certain limited partnerships to acquire tax-transparent status, aligning with international best practices in the taxation of such structures.

This decision highlights the UAE’s commitment to fostering a business-friendly environment by attracting investments and simplifying regulatory compliance. By offering competitive tax advantages and efficient administrative procedures, the UAE continues to solidify its position as a leading global investment hub.