UAE Family Foundations: How to Obtain Tax-Transparent Status Through EmaraTax Platform

The UAE Federal Tax Authority (FTA) has introduced a transformative initiative to enhance corporate tax compliance for family foundations through its advanced EmaraTax digital platform. This innovative move allows eligible family foundations to apply for unincorporated partnership status, reinforcing the UAE’s commitment to tax transparency, regulatory innovation, and global tax alignment.

Understanding Family Foundations in the UAE

Family foundations in the United Arab Emirates (UAE) serve as strategic legal structures primarily designed for wealth management, succession planning, and long-term asset protection. These entities enable families to safeguard their financial legacy while ensuring structured governance over their assets across generations.

Where Can Family Foundations Be Established in the UAE?

Family foundations in the UAE are typically set up within key financial free zones, which offer robust legal frameworks and regulatory benefits. The main jurisdictions include:

• Abu Dhabi Global Market (ADGM)
• Dubai International Financial Centre (DIFC)
• Ras Al Khaimah International Corporate Centre (RAK ICC)

Corporate Taxation Framework: Federal Decree-Law No. 47 of 2022

Under Federal Decree-Law No. 47 of 2022, family foundations are classified as juridical persons and are therefore subject to UAE Corporate Tax. However, Article 17 of the Corporate Tax Law (CTL) introduces an opportunity for tax-transparent treatment. If approved, the family foundation itself is not taxed—instead, the beneficiaries are recognized as the direct owners of the assets for tax purposes. This provides enhanced flexibility for managing intergenerational wealth.

Unincorporated Partnership Status: Benefits & Key Provisions

With the issuance of Ministerial Decision No. 261 of 2024, the FTA permits qualifying family foundations to apply for unincorporated partnership status. This treatment brings the following benefits:

• Tax Transparency
  Approved foundations do not need to file corporate tax returns. Instead, each beneficiary is responsible for their own individual tax obligations based on income and activities.
• Simplified Compliance
  The application is processed efficiently via the EmaraTax platform, ensuring ease of use for foundations, registered tax agents, or authorized legal representatives.
• Clear Eligibility Requirements
  To qualify, a family foundation must:
  • Already be registered for corporate tax.
  • Demonstrate that it was not created with the primary intent of avoiding tax.
  • Ensure beneficiaries fulfill their own tax duties.

This status enhances legal clarity and supports corporate tax law compliance across private wealth structures in the UAE.

EmaraTax Digital Platform: Modernizing UAE Tax Administration

The EmaraTax platform is a centralized, government-backed digital hub designed for seamless tax administration. With integrated smart services and secure functionality, it enables efficient submissions and end-to-end management of tax processes. Its role in streamlining the “Family Foundations as Unincorporated Partnerships” application exemplifies the UAE’s forward-looking approach to digital governance in taxation.

Implications for Family Foundation Beneficiaries

Beneficiaries must evaluate their individual corporate tax obligations under UAE law:

• Natural Persons: Individuals not engaged in business activities or earning below AED 1 million annually are generally exempt from UAE corporate tax.
• Business Owners: Beneficiaries involved in business with annual turnover above AED 1 million must register for corporate tax and file returns.

This distinction ensures personal investment income remains outside the scope of corporate tax, preserving the foundation’s core purpose: wealth preservation and intergenerational planning.

Family Foundations Tax Treatment: Key Considerations

While family foundations offer substantial advantages in wealth management and estate planning, they must not be used as mechanisms solely for tax avoidance. The foundation retains legal ownership of assets, even though tax transparency applies. Proper documentation and strategic intent are vital to gaining approval and maintaining compliance.

Step-by-Step Guide: Applying via EmaraTax

• 🔹 Step 1: Register for Corporate Tax
  Ensure the family foundation is registered with the Federal Tax Authority (FTA).
• 🔹 Step 2: Check Eligibility
  Meet all conditions outlined in Federal Decree-Law No. 47 of 2022 and Ministerial Decision No. 261 of 2024.
• 🔹 Step 3: Access EmaraTax
  Login to the EmaraTax platform using official credentials.
• 🔹 Step 4: Submit Application
  Complete and submit the designated form: “Family Foundations as Unincorporated Partnerships”
  Submission can be made by:
  • The taxpayer (foundation representative)
  • A registered tax agent
  • An authorized legal representative
• 🔹 Step 5: Upload Supporting Documents
  Attach the following:
  • Corporate tax registration certificate
  • Beneficiary details
  • Financial statements, if applicable
• 🔹 Step 6: Await FTA Approval
  The FTA will review and respond to your application. If approved:
  • The foundation gains unincorporated partnership status
  • No need to file future corporate tax returns
• 🔹 Step 7: Ensure Beneficiary Compliance
  Each beneficiary must:
  • Register for corporate tax if required
  • File individual returns based on their income
• 🔹 Step 8: Maintain Full Compliance
  Ongoing adherence to UAE corporate tax laws is critical. Periodic reviews and expert consultations are recommended to retain favorable status.