23 June 2026 • 9 minute read
UAE FTA issues updated Corporate Tax guidance on Family Foundations
Background
Family Foundations are increasingly being used by High-Net-Worth Individuals and wealthy families to organize the ownership of assets and investments, facilitating objectives such as asset protection, inheritance planning, wealth management and tax efficiency. While the UAE has introduced Corporate Tax in 2023, with at a standard rate of 9%, wealth structuring vehicles that qualify as a Family Foundation can be treated as Unincorporated Partnerships, meaning they will not be subject to tax themselves.
In May 2025, the UAE Federal Tax Authority (FTA) published a Corporate Tax (CT) guide on the taxation of Family Foundations, providing guidance on the treatment of foundations, trusts and similar entities. For an overview of the original Guide, please refer to our Gulf Tax Insights article published in May 2025.
The FTA has since published an updated version of the guide. The update of June 2026 introduces clarifications and provides guidance on topics not previously addressed. This article focuses on those changes and their practical implications.
Key Highlights of the Updated Guide:
- Treatment of LLCs and similar entities
The updated guide explicitly confirms that a Limited Liability Company does not qualify as a "similar entity" for the purposes of the Family Foundation definition and it therefore cannot apply to the FTA to be treated as fiscally transparent under Article 17(1) of the UAE CT Law.
An LLC can however still achieve tax transparent treatment where it is wholly owned and controlled by a qualifying Family Foundation that is itself already treated as an Unincorporated Partnership.
- Clarification on multi-tier structures
The updated guide introduces two important clarifications for multi-tier Family Foundation structures:
- Firstly, where the Family Foundation at the top of the ownership chain satisfies the beneficiary condition under Article 17(1)(a) of the UAE CT law, this condition flows down to all wholly owned juridical persons beneath it. The latter can also elect to be treated as an Unincorporated Partnership, and this removes a practical uncertainty for families with complex multi-tier structures.
- Secondly, the "wholly owned" requirement can be satisfied collectively by two or more Family Foundations, provided their combined ownership reaches 100% and each is treated as an Unincorporated Partnership. This enables jointly held investment vehicles that may previously have been considered ineligible for tax transparent treatment.
- New guidance on asset transfers, structural changes, and Family Offices
The updated guide addresses three new topics:
- Transfers into a Family Foundation: The guide clarifies the CT treatment of asset contributions into a Family Foundation. Where the transferor is a Taxable Person and a Related Party, the transfer must be made on an at arm's length basis and any resulting gain may be subject to CT.
- Acquisition or disposal of juridical persons: Where a juridical person becomes wholly owned by a Family Foundation, it may cease to be a Taxable Person subject to meeting the relevant conditions. Where it subsequently exits the structure, it reverts to being subject to CT. In such cases, no adjustment is made to the base cost of assets when a juridical person transitions between transparent and opaque status.
- Family offices: Single Family Offices (SFOs) and Multi Family Offices (MFOs) will generally not qualify as fiscally transparent Unincorporated Partnerships given the nature of their activities and they will instead be subject to CT as Resident Persons on all income, including management fees. Where the SFO or MFO is a Free Zone Person, a 0% CT rate may be available on Qualifying Income, but only where they are subject to the regulatory oversight of a Competent Authority.
Conclusion / Key takeaway / recommendation
The updated guidance is a welcome development as it provides greater certainty regarding the operation and tax treatment of Family Foundations and further strengthens the UAE's position as an attractive jurisdiction for private wealth structuring, succession planning and long-term wealth preservation.
