What is the Qualifying Investment Fund Exemption in UAE corporate tax?

The Qualifying Investment Fund Exemption lets investment funds avoid paying corporate tax if they meet all required conditions and register with the FTA.

How does the FTA decide the effective date of exemption for investment funds?

The FTA decides the effective date based on the tax period in the application. If the tax period is incorrect, the FTA sets the correct date based on compliance records.

What records must investment funds keep to maintain exempt status?

Investment funds must keep all supporting records for 7 years after the end of the tax period and submit an annual declaration confirming compliance within 9 months after the tax period ends.

CT Compliance for Investment Funds in UAE

The UAE gives many opportunities to businesses in the region. The introduction of corporate tax at a lower rate than other GCC countries makes the UAE an attractive place for investment funds. Businesses must follow the new tax rules to avoid penalties and keep their good standing in the market. These rules are important for investment fund entities that operate within the UAE.

Compliance with the tax regime is not optional. If businesses do not comply, they will get penalties and fines, which can hurt their reputation in the market. This article explains the main CT compliance requirements for investment funds in the UAE.

CT Compliance Framework

Investment fund entities must follow these rules to avoid getting penalties or fines from the authorities. The requirements are as follows:

Entities must apply for the Qualifying Investment Fund Exemption.
Entities must register under the FTA and get a CT tax registration number before they apply for the exemption.
Entities must meet the qualifying fund conditions under the tax regime to continue with the application.
The exemption application must include the correct tax period for which the entity seeks exemption.
The FTA will approve or reject the exemption application based on the provided details.
If the exemption is granted, the FTA will give the tax period and other necessary details.

Entities must meet all the conditions to get and keep the exempt status for the investment fund.

Application for Exemption: Step-by-Step

To get the exempt status, the application must have the correct tax period. If the tax period is incorrect, the FTA will provide the right start date for the exempt status based on the registration information. Sometimes, if a qualifying investment fund acquires an applicant during a tax period, the FTA can assign a different start date for the exemption.

If the application tax period is incorrect, but the entity meets all conditions, the exempt status will start from the date when all requirements are met.
Entities must keep all records proving exempt status for at least 7 years after the tax period ends.
Every year, entities must submit a declaration to confirm that they meet all exemption conditions, which must be done within 9 months after the end of the tax period.

Importance of Following Compliance Rules

Following compliance rules helps entities avoid penalties and keeps their business reputation strong in the UAE. The new corporate tax regime brings more responsibility for investment funds. Maintaining records, making correct applications, and filing annual declarations are key steps for staying compliant.

Businesses should understand all exemption rules and requirements.
Timely and correct applications help avoid mistakes.
Regular review of compliance helps businesses stay prepared for audits.

How Mubarak Al Ketbi Chartered Accountants Can Help

If you want to stay on the safe side and avoid getting caught between a rock and a hard place, our experts at Mubarak Al Ketbi Chartered Accountants are here for you. We make sure your business follows every compliance rule for investment funds in the UAE. Here’s what we offer:

Expert advice on CT compliance for investment funds
Step-by-step help with exemption applications
Support with record-keeping and annual declarations
Guidance for avoiding penalties and fines

For more information, visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud, Dubai – UAE
Or contact/WhatsApp: +971 50 276 2132

FAQs CT Compliance for Investment Funds in UAE

Do individuals pay corporate tax on salary?

No. Salary stays outside CT. A person pays CT only on business income when the person runs a licensed business and crosses the turnover threshold.

Can a free zone company sell to the mainland and keep 0%?

It depends on the activity, the role in the supply chain, and the de-minimis rules. Non-qualifying mainland income generally faces 9%.

Do small firms need audited accounts?

Some firms may use IFRS for SMEs, but certain categories, including many free zone persons seeking QFZP status or entities above revenue thresholds, need audited statements.

What records must a taxpayer keep?

Keep ledgers, invoices, contracts, bank statements, TP files, and working papers for the statutory period. Keep scans and hard copies when needed.

When is the CT return due?

The return and payment are due within nine months after the end of the tax period. Add the date to your calendar with early reminders.