MoF Revises Ministerial Decision To Enhance Tax Relief For Unincorporated And Foreign Partnerships

The Ministry of Finance (MoF) has introduced changes to Ministerial Decision Nos. (261) of 2024. These amendments pertain to Unincorporated Partnerships, Foreign Partnerships, and Family Foundations under Federal Decree-Law No. 47 of 2022 on Corporate and Business Taxation. The revised decision is effective for tax periods starting from 1 June 2023, offering administrative and tax relief measures.

The updated regulations primarily aim to ease compliance for unincorporated partnerships. They remove the requirement to inform the Federal Tax Authority (FTA) within 20 business days about changes in partnership composition, such as new partners joining or existing ones leaving. This change simplifies processes for domestic businesses.

Foreign partnerships will now be considered tax transparent in the UAE if they are treated similarly in their home countries. This eliminates the need for individual partners to confirm their tax status separately with the FTA, streamlining procedures for foreign entities operating in the UAE.

Additionally, juridical persons within family foundations can apply for tax transparent status. This option aligns family foundation benefits with the UAE Corporate Tax framework, enhancing tax advantages for those holding assets within the country.

Younis Haji AlKhoori, Under-Secretary of the Ministry of Finance, stated: "The amendment to this decision reflects the UAE's Corporate Tax regime flexibility to provide certainty to taxable persons and sustain confidence in the UAE's competitive business environment." He emphasized that these changes aim to reduce compliance burdens on taxpayers while reinforcing the UAE’s position as a leading global hub for business and investment.

The revised Ministerial Decision introduces significant administrative and tax relief measures. These adjustments are designed to support domestic businesses, foreign partnerships, and family foundations by simplifying compliance requirements and enhancing tax benefits.

With inputs from WAM