On 19 September 2025, the Federal Tax Authority issued a Public Clarification (CTP008) detailing the corporate tax treatment of family wealth management structures. This Clarification is an important guide to determine whether Family Foundations and related entities may be treated as tax transparent for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. This provides greater certainty and much-needed flexibility for family wealth and succession planning in the UAE.

The FTA has also cleared up that a limited liability company (LLC) is excluded from the definition of a “Similar Entity” to a trust or foundation and cannot apply for family foundation status unless it is wholly owned by a family foundation and meet the requirements of Article 17 of the UAE Corporate Tax Law. For the avoidance of doubt, ‘similar entity’ means an entity that has a similar legal structure or character to a foundation or trust.

Key aspects for family wealth structures under UAE Corporate Tax:

•  Entities without separate legal personality (e.g., unincorporated trusts) are automatically tax transparent.
• Foundations may apply for tax transparent status with the FTA if specific conditions are met.
• Free zone foundations that are not family foundations may still benefit from the 0% rate on qualifying income (subject to QFZP rules).
• Holding vehicles / SPVs wholly owned by a tax-transparent family foundation may themselves apply for transparency, even across multiple layers.
• Family members are not subject to corporate tax on personal investment or real estate income.