This decision outlines the conditions for an investment fund to be exempt from Corporate Tax as a 'Qualifying Investment Fund'. Conditions include conducting mainly Investment Business, being managed by an Investment Manager with at least three professionals, and ensuring investors lack control over day-to-day management. It also sets ownership diversity thresholds (e.g., a single investor owning no more than 30%/50% based on investor numbers). For REITs, additional conditions apply, such as having real estate assets over AED 100 million and being listed. It details how investor income is adjusted to include their share of fund income.
Conditions for Qualifying Investment Funds for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
Cabinet Decision No. 81 of 2023
Issued 18 July 2023 – (Effective from day following publication in the Official Gazette)
[GTL Notes]
The Cabinet has decided:
Having reviewed the Constitution,
Pursuant to what was presented by the Minister of Finance and upon the approval of the Cabinet,
Article 1 - Definitions
Definitions in Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses shall apply to this Decision, and the following words and expressions shall have the meaning assigned against each, unless the context requires otherwise:
Investment Business
:
The issuing of investment interests to raise funds or pool investor funds or establish a joint investment fund with the aim of enabling the holder of such an investment interest to benefit from the profits or gains resulting from the entity's acquisition, holding, management or disposal of investments, in accordance with the applicable legislation of the State.
Real Estate Gains
:
Gains derived from the sale or disposal of land or real estate.
Real Estate Income
:
Income derived from renting of land or real estate, excluding Real Estate Gains.
Real Estate Asset Percentage
:
The portion of the Real Estate Income generating assets as a percentage of the total value of the assets of the investment fund.
Real Estate Investment Trust (“REIT”)
:
A real estate fund as defined in the applicable legislation of the State.
Corporate Tax Law
:
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
Article 2 - Conditions to Exempt an Investment Fund from Corporate Tax
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