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Post By: admin December 19 2024

What Are The Key Areas To Be Known For Investment Funds Under The Corporate Tax Law?

Entities in the UAE who are planning to establish their businesses, and the entities already operating in the UAE are expected to be aware of the CT regime and its implementation on the businesses. The corporate tax laws have different implications on different types of business, which includes certain conditions which are to be aware of for determining the tax liability, tax returns, the exemptions and deductions available. The investment fund entities are always expected to be aware of the certain key areas related to the implementation of the CT law on the investment funds. In this blog we will discuss the key areas that are to be known by the investment funds regarding the CT law.

Key Areas To Be Known Related to Corporate Tax on The Investment Funds

Discover the essential insights to navigate investment funds under UAE corporate tax regulations effectively.

CT Application On The Investment Funds And The Investment Managers

The implementation of the CT on the investment funds is subject to certain conditions and the capital structure of the entities. The implementation of the CT might vary based on the business structure of the entity. If the investment fund is a resident person in the UAE, then it might be treated differently as it will be subject to the CT, whereas if the investment funds are established as an unincorporated partnership, then it has a different CT implementation as it will not be considered as a taxable person under the CT. If the investment fund is established as the non-resident entity, then the CT implementation will be based on the criteria related to the permanent establishment, state-sourced income, or the nexus of such an entity.

For the managers, the CT will be charged on the fee earned by such a person from the services provided as a part of investment management. The CT implementation is subject to change based on the business structure and the entity established.

You may also like to read: Conditions for Qualifying Investment Fund Status under UAE CT

Qualifying Investment Fund Status

Qualifying investment fund status enables an investment fund to be exempted from the CT law whereby the entity will not be considered a taxable person, and it is not to be a part the qualifying groups. Also, it will be able to take the benefits of the business restructuring reliefs and the provisions of the tax losses.

In order to be a qualifying investment fund, there are certain conditions that are to be met as per the CT law. If these are met, then only the application for the Qualifying Investment Fund will be approved by the authority.

If these conditions are not met by the entities, then the status would cease, and the entity will be taxable under the CT law. The conditions that are to be met include the basic conditions, such as the regulatory oversight condition, the fund ownership condition, and the main purpose condition. There are some other additional conditions to be met for entities other than the REITs, including the investment business condition, the diversity of ownership condition, the investment manager condition, and the independence condition. For the REITs, the additional conditions to be met may include the REIT minimum real estate asset value condition, the REIT ownership condition, and the REIT real estate percentage condition.

You can also like read: What are Investment Funds and the Investment Manager as per UAE CT law?

CT Compliance Requirements for Investment Funds

There are certain compliance requirements that are to be ensured while the investment funds are established and operated. The mandatory registration must be done with the authority in order to get the exempt status. The qualifying investment fund conditions are to be met in order to apply for the exemption. The tax period of the entity is to be specifically highlighted during the application for any such exemption. Such application will be applicable if approved from the date of the start of the tax period highlighted in the application submitted. The FTA might instruct the implementation of any other start date as per the certain conditions.

Investment Manager Exemptions

To avoid the increase in the CT liability of the person, like foreign investors, the Investment Management Exemption has been provided by the CT law. For the exemption the stated conditions are to be complied. If these conditions are not met, then it might result in the cessation of the exemptions and further procedures.

How Can CDA’s Tax Experts Serve Your Tax Needs?

CDA, has a team of experts who are well enriched with the new corporate tax regime. We can guide you in understanding the CT implementation for your businesses in the UAE. We ensure to provide you with the personalised tax services whereby enabling you to reduce the tax liabilities and file the tax returns on time. Our team is always at your arm's distance to provide all kinds of tax assistance; just make a call to know more.