UAE Corporate Tax Updates | Qualifying Investment Funds (QIFs) and Qualifying Limited Partnerships (QLPs)
The Ministry of Finance has issued Cabinet Decision No. 34 of 2025 concerning Qualifying Investment Funds (QIFs) and Qualifying Limited Partnerships (QLPs), under Federal Decree-Law No. 47 of 2022 on Corporate Taxation. The new policy, which supersedes Cabinet Decision No. 81 of 2023, aims to promote initiatives that attract investment and stimulate economic growth.
Cabinet Decision No. 34 of 2025 is legislation that clarifies the treatment of Qualifying Limited Partnerships (QLPs) and Qualifying Investment Funds (QIFs) within the corporate tax regime of the United Arab Emirates. It builds on earlier legislation and provides investors and fund managers with greater flexibility by offering tax advantages, simplified compliance procedures, and clearer exemptions.
This decision is particularly important for asset management companies, venture capitalists, private equity firms, real estate investment trusts (REITs), and foreign investors seeking to start or expand businesses in the United Arab Emirates.
QIFs may benefit from exemptions from UAE Corporate Tax under the new regulations, provided they fulfil specific requirements:
- The fund cannot exceed the 10 percent real estate asset requirement.
The ownership structure of the fund must remain diverse, with no excessive concentration of ownership within a limited number of investors. - These requirements are designed to ensure that QIFs are set up and operated in a manner that promotes widespread investor involvement and reduces the potential for tax evasion.
Income received through a QIF will not be subject to UAE Corporate Tax as long as it continues to comply with these thresholds, providing investors with significant savings and higher net returns.
The updated regulations introduce a definite threshold for real estate exposure:
- A fund that generates more than 10 percent of its income from real estate assets will be partially liable for Corporate Tax.
- If the threshold is exceeded, corporate tax will apply to 80 percent of the real estate income.
Conditions for Qualifying Limited Partnerships (QLP) Exemption
A limited partnership with legal personality may request a QLP exemption under Articles 1 and 5 of Decision No. 34, provided that all of the following requirements are met.
- The Partnership must have been established for the sole purpose of collective investment.
- The Partnership must have been established under a legal framework that was in force before 1 June 2023.
- The Partnership must engage solely in investment business, with any ancillary activity not exceeding 5% of the total revenue.
- The Partnership must not generate income from any form of exploitation of immovable property located in the UAE.
- The Partnership must not be established primarily for the purpose of tax avoidance.
Once these conditions are fulfilled, the Limited Partnership may apply for an exemption. If granted, the entity will be exempt from corporate tax, and the tax liability will shift to the investors. They will be required to report their proportional share of the partnership's net income on their individual tax returns, subject to any applicable exemptions.
By introducing measures that allow certain limited partnerships to attain tax-transparent status, the ruling aligns the UAE with global best practices in the taxation of such arrangements. These targeted improvements will help maintain investor confidence and regulatory certainty across cross-border fund structures as the UAE's corporate tax system evolves.
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