What is a family foundation in the UAE?

A family foundation is a charity set up by a family to manage money or assets for helping others or supporting social causes.

Are all family foundations exempt from corporate tax?

No, only those that meet strict rules for charitable activity and don’t run business operations can apply for exemption.

What should a family foundation do to get tax exemption?

The foundation must apply to the FTA, prove it only does charity, and follow all FTA conditions for exemption.

What happens if a family foundation earns money from business or investments?

It may become taxable and must register, file returns, and pay tax if required by the UAE law.

How can Mubarak Al Ketbi (MAK) Auditing help family foundations?

MAK Auditing helps with tax exemption applications, compliance, tax filing, and advice on keeping charitable status.

Corporate Tax for Family Foundations UAE

Corporate Tax for Family Foundations in UAE

Family foundations help families in the UAE give back to society with kindness and long-term support. These organizations play an important role in helping education, health, social welfare, and other good causes across the country. Many people want to know if the UAE’s new corporate tax law affects family foundations or if they are tax-exempt. This article explains the law in simple words and tells you what a family foundation must do to follow the rules in the UAE.

What Are Family Foundations?

A family foundation is a special type of charity. A family or a group of individuals forms the foundation. Their main goal is to support different charitable causes in the community. Some family foundations help schools, some help hospitals, and some help with social projects or environmental needs.

A family foundation usually:

Receives money and assets from family members or supporters
Manages these assets to help others
Donates money to good causes for the benefit of families or society

These foundations work with a sense of duty to make the world a better place, especially for future generations.

Are Family Foundations Taxed Under UAE Corporate Tax Law?

The UAE corporate tax law says some organizations need to pay tax, but it gives special treatment to those that only focus on charity or philanthropy. A family foundation that does only charity work may be exempt from corporate tax if it meets certain rules.

The main rules are:

The foundation must focus on helping people, the public, or both
Its main activity is to receive, hold, invest, and give out assets or money for charitable purposes
It can’t run a business activity that is taxed under the law, even if one of its founders or beneficiaries does so
Its main goal must not be to avoid tax
It must meet any extra conditions set by the FTA (Federal Tax Authority)

If a family foundation meets all these rules, it can apply to the FTA to be treated as an “unincorporated partnership.” If the FTA agrees, the foundation will not have to pay corporate tax, and it will not be called a “taxable person” under UAE law.

What If a Family Foundation Starts a Business Activity?

If a family foundation begins to run a business, invests for profit, or does anything commercial, things change. In that case:

The foundation may become a taxable person under the UAE law
It must register with the FTA through the EmaraTax Platform
It must file annual tax returns

But just because it makes some money doesn’t mean it must pay 9% tax right away. Each case is different. The law checks what the income is, how it was earned, and if any exemption still applies. That’s why it’s smart for every foundation to check with experts like Mubarak Al Ketbi (MAK) Auditing before making business decisions.

Key Steps for Family Foundations to Stay Compliant

To avoid mistakes and stay compliant, a family foundation in the UAE should:

Focus on charitable, non-commercial activities
Keep clear records of all donations and spending
Apply to the FTA for tax exemption if eligible
Ask an expert for help before starting any business activities
File returns if required, and respond to FTA requests quickly

Here are some important points:

The UAE wants to encourage giving and charity, so it supports family foundations that follow the rules
The law is strict about not using foundations just to avoid taxes

Tax exemption is a benefit, but it depends on following the law properly

Why Choose Mubarak Al Ketbi (MAK) Auditing?

How Mubarak Al Ketbi (MAK) Auditing Can Help Family Foundations

Mubarak Al Ketbi (MAK) Auditing supports every family foundation in the UAE with tax and compliance advice. Our team of expert consultants helps you stay on the right side of the law, find possible tax exemptions, and file returns on time. We know the UAE tax rules like the back of our hand, so your foundation won’t get caught between a rock and a hard place.

For more information, visit our office:
“Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates”

Or contact/WhatsApp: +971 50 276 2132

FAQs on Corporate Tax for Family Foundations 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.