The Top 5 Insights Series – The UAE CT Law Family Foundations

Key considerations for Taxation of Family Foundations Corporate Tax Guide | CTGFF1 & Federal Tax Authority Decision No. 5 of 2025

A brief 5-minute guide

Following the recent publication of the FTA’s Tax guide on the taxation of Family Foundations and the FTA’s Decision no. 5/2025, we summarize the top 5 aspects to consider:

1. Family Foundation

A foundation, trust or similar entities, regardless of whether they are formed in the UAE or in a foreign jurisdiction, can become a Family Foundation. 

The “similar entity” concept is one that is intended to be used for the administration of family wealth and that is not a commercial company. 

Juridical persons, including LLCs and other types of SPVs established under UAE Law, when wholly owned and controlled by a Family Foundation, can also be treated as tax transparent.

2. Beneficiaries

For an entity to be a Family Foundation its beneficiaries must be natural persons or a public benefit entity (different concept to that of Qualifying Public Benefit Entity).

Natural persons can either be direct beneficiaries or indirect beneficiaries (through tax transparent entities). Furthermore, there is no requirement for the beneficiaries to be of the same family, there is no relationship requirements.

“Public benefit entity” is not defined, hence it follows its ordinary meeting, meaning a UAE or foreign entity whose purpose is the welfare of the public and society (e.g., not-for-profit, charitable organization). However, an additional condition applies (type of income or mandatory distribution).

3. Multi-tier

In multi-tier structures (i.e., where a Family Foundation wholly owns UAE or foreign juridical persons), if the Family Foundation entity automatically obtains the status, the underlying companies need to assess whether they also meet the conditions to obtain the status.

A Family Foundation can make an application on behalf of the underlying subsidiaries or they can make it one their own.

4. CT Registration / Application 

Where an entity is already, by default, fiscally transparent (e.g., contractual trust) and meets the conditions to be a Family Foundation, it will automatically be a Family Foundation (no confirmation or application required).

However, these entities are still required to register for UAE Corporate Tax purposes – particularly, foreign entities with a nexus in the UAE are required to register for UAE Corporate Tax (including beneficiaries that are foreign public benefit entities).

5. Compliance

A UAE or foreign juridical person wishing to be a Family Foundation must submit an application to the FTA (before the end of the relevant Tax Period) and, if granted, must also submit an annual confirmation (within nine months from the end of the relevant Tax Period) ensuring compliance with the conditions (applicable to all Family Foundations, regardless of whether they applied/will apply for the status or automatically qualify for it).

Specific timings apply before 31 December 2025 to cover previous Tax Periods. Also, the annual confirmation must be submitted by 31 December 2025 for the Tax Periods that ended on or before 31 March 2025.