What Are The Conditions That Are To Be Met For Getting Qualifying Investment Fund Status Under CT?
When UAE launched Corporate Tax (CT), many businesses faced new challenges. Investors and investment funds must learn how CT rules affect them. Understanding the qualifying investment fund status helps everyone plan ahead. In this article, you’ll learn the conditions for getting Qualifying Investment Fund status and what happens if you don’t follow the rules.
What Are the Basic Conditions to Qualify for Qualifying Investment Fund Status?
- The UAE government set the main rules in Article 10(1) of the CT law and Cabinet Decision No.81 of 2023fund or its manager must get regulatory oversight from the UAE authority or another approved foreign authority.
- The ownership interest in the investment fund must be traded on a recognized stock market, or the fund must market and offer shares to investors as much as possible.
- The main goal of the fund must not be to avoid corporate tax.
All these conditions help the UAE keep its tax system fair and strong. If any basic condition is missing, the fund can’t get the special status.
What Are the Additional Conditions That Are To Be Met?
Some extra rules apply to funds that aren’t REITs (Real Estate Investment Trusts):
- The fund should run only investment business activities. It must focus on its main investment activity. If the fund does extra activities, those must support its main business.
- A single investor and their related parties can’t own over 30% of any fund with fewer than 10 investors. For funds with 10 or more investors, no single investor can own more than 50%.
- The fund manager must hire at least three investment professionals.
- The day-to-day management must be independent. Investors can’t control or manage daily operations.
REITs have different special conditions set by the Cabinet Decision:
- The real estate assets (not including land) owned or managed by the REIT must be worth over AED 100 million.
- At least 20% of the REIT’s share capital must be listed on a recognized stock exchange, or it should be fully owned by institutional investors (not related parties).
- REITs must keep at least 70% of their assets as real estate during each financial year.
If funds or REITs break any of these rules, they lose their qualifying status.
What Is The Consequence of Non-Compliance With The Conditions?
Not following the CT rules brings penalties. If a fund doesn’t meet the required conditions during any tax period, it will lose its qualifying status right from the start of that period. The fund must then pay tax like a regular entity.
Sometimes, funds may not lose their status if:
- The condition was broken because the fund was being liquidated or shut down.
- The non-compliance happened by accident, and the fund is working to fix it quickly.
All funds must stay alert with their compliance. Missing rules even for a short time can mean losing tax benefits.
What Can Help You From Mubarak Al Ketbi (MAK) Auditing?
When tax law feels tough, Mubarak Al Ketbi (MAK) Auditing gives expert support. We guide you with each CT step. Our team helps you with registration, exemption applications, and tax filing. We work by your side to keep your fund safe from penalties. Remember, the ball is in your court, so act fast for the best results.
Or contact/WhatsApp: +971 50 276 2132
For more information, visit our office: “Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates”
