As the UAE continues to solidify its position as a globally competitive financial hub, the Federal Tax Authority’s latest Corporate Tax Guide on Family Foundations (CTGFF1, May 2025) marks a significant milestone. This comprehensive document provides long- awaited clarity on the Corporate Tax treatment of Family Foundations, Trusts, and similar entities under Article 17 of the UAE Corporate Tax Law.
What Is a Family Foundation?
For Corporate Tax purposes, a Family Foundation isn’t defined by a specific legal form. Instead, it refers to a foundation, trust, or similar entity that meets specific conditions, mainly serving to manage and preserve family wealth across generations, without engaging in business activities.
Entities that meet these criteria can apply to be treated as Unincorporated Partnerships, gaining fiscal transparency and thus avoiding Corporate Tax in their own right. This is a game-changer for estate planning and wealth structuring in the region.
Conditions to Qualify
To be treated as a Family Foundation under Article 17(1), entities must:
1) Benefit natural persons or public benefit entities
2) Primarily manage investments or savings
3) Avoid business activities (as defined by the Law)
4) Not be used for tax avoidance
5) Follow special distribution rules when public benefit entities are involved
Meeting these criteria allows Family Foundations and even their wholly owned subsidiaries to apply for fiscally transparent status—shifting the tax liability to the beneficiaries instead.
Why This Matters
- Clarity for families, advisors, and trustees managing intergenerational wealth
- Alignment with international tax standards, while preserving local flexibility
- Opportunities for compliant structuring for foreign and local family entities
- Reinforcement of the UAE & competitive advantage in private wealth planning
Key Takeaways for Practitioners
- Family Foundations, even foreign ones, may qualify if they have a nexus in the UAE.
- Unincorporated Trusts (like DIFC or ADGM trusts) are fiscally transparent by default.
- Multi-tier structures involving LLCs or SPVs may also benefit—if held by a qualifying
Family Foundation.
Let’s Discuss: How do you see these changes influencing family offices, wealth planners, or trustees operating in the UAE? Are your clients ready to restructure?
Contact us today for expert assistance.
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