Who can create a private pension fund in the UAE?

Companies in the UAE can set up private pension funds for their employees and get tax exemption if they follow the rules.

How much can employers deduct for pension contributions?

Employers can deduct up to 15% of total eligible compensation paid to employees in the tax year.

What happens if a fund earns income from other sources?

The fund could lose its tax exemption if it breaks the income rules.

Why do these rules matter for employees?

The rules protect employees’ savings, helping them get better pensions when they retire.

Who can help with setting up or auditing these funds?

Mubarak Al Ketbi (MAK) Auditing gives full support and advice for pension and social security funds in the UAE.

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.