Secure the structure. Preserve the legacy.
As families across the UAE and Africa structure their wealth for the next generation, the UAE Federal Tax Authority (FTA) has issued formal guidelines on the Corporate Tax treatment of Family Foundations. This marks a pivotal moment for legacy planning in the region.
Whether you already have a Foundation or are considering one, understanding the tax implications is no longer optional, it is essential.
What is a Family Foundation in tax terms?
Under UAE Corporate Tax Law, a Family Foundation is any foundation, trust, or similar entity established for the benefit of family members or charitable causes.
Legally, it may operate under DIFC, ADGM, or RAK ICC. For tax purposes, if it meets five key conditions, it can be treated as an Unincorporated Partnership, making it fiscally transparent and potentially exempt from paying Corporate Tax itself.
Do you qualify for tax transparency?
To be eligible, your Foundation must:
- Have clearly identified family or charitable beneficiaries
- Be used to manage and preserve assets, not operate a business
- Engage only in passive activities (such as real estate, shares, dividends)
- Exist for a legitimate purpose, not for tax avoidance
- Distribute income to charitable entities within the required timeframes
If approved, the Foundation is no longer taxed as a company. Instead, income flows through to the beneficiaries, who are often not subject to tax in the UAE.
The compliance path: how to stay tax-transparent
To secure and maintain this status, three key actions are required:
• Register with EmaraTax (mandatory for all juridical persons)
• Apply for Unincorporated Partnership status via EmaraTax
• File annual confirmations to prove the Foundation continues to meet all conditions
If the Foundation owns companies, those subsidiaries may also qualify, provided they are passive, wholly owned, and properly governed.
Real estate, holding companies, and multi-tier structures
- Foundations holding real estate typically qualify.
- Foundations running commercial businesses do not.
- Multi-tier structures must ensure every layer meets the necessary conditions.
What this means for you and your family
- Investment and real estate income remains untaxed at the beneficiary level
- No Corporate Tax applies at the Foundation level, if compliant
- Loss of status results in default taxation across the structure
Our recommendation
At Dawia Family Office, we support clients to:
- Review Foundation structures and confirm eligibility
- Prepare and submit required filings
- Restructure entities to maintain compliance and tax efficiency