Private Pension & Social Security Fund UAE Tax Rules

Private Pension & Social Security Fund UAE Tax Rules

Private Pension and Social Security Fund: Corporate Tax Update in UAE

New Tax Rules for Private Pension Funds in UAE

The UAE government has made big changes to the rules for private pension funds and private social security funds. Mubarak Al Ketbi (MAK) Auditing helps companies and workers understand these new laws in the best way. These changes aim to make things fair for everyone and keep workers secure after retirement.

The new rules are written in Ministerial Decision No. 115 of 2023. These updates explain who gets tax exemptions, what counts as allowed income, and how companies must run their funds.

What Is a Private Pension Fund?

A private pension fund is a special fund created by a company to manage pension contributions. It pays workers when they retire at a certain age. The General Pension and Social Security Authority (GPSSA) in the UAE gives rules for these funds to be exempt from corporate tax. Here’s what your fund must do:

  • The fund must only hold assets for the pension plan, with money from contributions or law.
  • The fund gives members or their families the right to get money or benefits from its assets.
  • The fund earns only the allowed types of income in Article 4 of the Ministerial Decision.
  • The fund needs to have a licensed auditor to check the accounts.

Contribution Deductions for Private Pension Funds

Employers want to help workers save for retirement. The law now lets companies deduct all money they pay to private pension funds for employees, but only up to 15% of total eligible compensation paid in that tax period. Mubarak Al Ketbi (MAK) Auditing helps businesses keep track of these deductions and make sure everything is done right.

What Is a Private Social Security Fund?

A private social security fund is a fund created by a company for workers’ end-of-service benefits. To be exempt from tax, the fund must follow these steps:

  • The fund must only use assets given to it for paying end-of-service benefits.
  • The fund’s money can only come from the legal sources in Article 4.
  • The fund must have a licensed auditor who checks its accounts each year.

Where Do These Funds Get Their Income?

Funds for private pensions and private social security must only get money from certain sources. These are:

  • Income from safe investments or bank deposits, used to pay benefits—not for running a business.
  • Underwriting commissions charged for the fund’s activities.
  • Rebates or refunds from charges paid to asset managers.
  • Any other income earned from investments that help members or their families.

If a fund gets money in other ways, it may lose its exemption.

What Do the New Rules Mean for Employers and Employees?

These changes mean more fairness between government and private pensions. Mubarak Al Ketbi (MAK) Auditing helps every business follow the rules. Here’s what you need to know:

  • Employers must check their pension or social security funds and update their records.
  • Employees will notice changes too, especially Emiratis. Their take-home pay may drop, but their pension savings will grow for the future.

Key Points for Businesses:

  • All private pension and social security funds must keep proper records.
  • Companies must appoint a licensed auditor for the fund.
  • Pension contributions may be deducted only up to 15% of total eligible pay.
  • Funds should not run their own businesses or break the allowed income rules.

How to Stay Compliant with Pension and Social Security Fund Rules

Mubarak Al Ketbi (MAK) Auditing helps companies stay out of trouble and get the best benefits for workers. Follow these steps:

  • Review your fund’s setup and see if it follows the new rules.
  • Keep complete and clear records for every contribution and payout.
  • Ask your auditor to check all the fund’s accounts.
  • Only let the fund earn money from the sources listed above.
  • Contact Mubarak Al Ketbi (MAK) Auditing for expert advice and updates.

How Mubarak Al Ketbi (MAK) Auditing Can Help

When it comes to pensions, you don’t want to put all your eggs in one basket! Mubarak Al Ketbi (MAK) Auditing makes sure you meet every new rule and get every possible benefit.

We support you by:

  • Helping you set up and register pension and social security funds
  • Checking your fund’s income and records
  • Appointing the right auditor for your fund
  • Explaining the latest law changes in simple words
  • Keeping you and your employees safe and ready for the future

For more information, visit or contact us:

  • Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
  • WhatsApp/Call: +971 50 276 2132

FAQs on Private Pension & Social Security Fund UAE Tax Rules

Who is eligible for the UAE corporate tax penalty waiver?
Anyone who registers and files within seven months of their financial year end can get the penalty waiver.
What is the penalty for late VAT payment?
You pay 2% after 15 days, and another 2% after 30 days. Penalties increase the later you pay.
How do I get a refund for a paid tax penalty?
Register and file within seven months of your FY end, and the FTA will refund the penalty automatically.
How do I apply for a VAT penalty waiver in the UAE?
Apply directly to the FTA or through a registered tax agent with all required documents and reasons.
What happens if I don’t pay VAT or tax penalties on time?
ou may face interest, extra penalties, a tax assessment, and possible legal action by the FTA.

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