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Are Family Foundations Subject to Corporate Tax UAE?

A family foundation is a form of legal entity created by individuals to protect and manage their assets for philanthropic endeavors or investments. Therefore, it is essential for family foundations to seek the services of accredited tax consultants in UAE to stay compliant with tax regulations and standards and to avert penalties for noncompliance.

The Scope of Family Foundations Under the UAE Corporate Tax

Family foundations in the UAE should actively and solely engage in activities related to charity and philanthropic work to qualify for corporate tax exemption. For family foundations to fully qualify for UAE corporate tax exemption, they have to meet and demonstrate a track record of charitable activities. Thus, it is imperative for UAE family foundations to seek the services of top UAE tax consultants to seamlessly establish their corporate tax exemption status.   

Read More: Corporate Tax for Foreign Companies in UAE

Conditions to Be Treated as a Family Foundation:

  1. The Family Foundation has to be created for the benefit of specified or identifiable individuals, as well as for delivering a public benefit.
  2. The main activity of the Family Foundation is to receive, save, put money into, hand out, or otherwise manage funds. 
  3. The Family Foundation has a minimum of five natural persons as members, every one of whom has unconditional rights to the profits or losses generated by the Family Foundation.
  4. The Family Foundation does not engage in any activity that would be considered a Business or Business Activity under Clause 6 of Article 11 of UAE Corporate Tax Law, even if its founder, settlor, or any of its beneficiaries were to undertake a such activity or hold its assets directly.
  5. The Family Foundation's primary or fundamental objective is not to evade Corporate Tax- 
  6. The Family Foundation must be subject to compliance with Corporate Tax Law and should seek professional advice from a Corporate Tax Consultant or outsource Corporate Tax responsibilities as necessary.

Seek the Expert Services of Top Tax Consultants in the UAE. 

For family foundations to dissect and establish whether they qualify for corporate tax exemptions, the nature of conducted activities is the chief determinant. To establish the exemption status of family foundations in the UAE and to stay compliant with the corporate tax law, it is imperative and advisable to seek the services of accredited tax consultants in the UAE. Thus, contact us today and we shall be glad to assist you.  

Read More: Which Entities are not Subject to UAE Corporate Tax?

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.