UAE Corporate Tax Reform 2025: Key Changes and Timeline

The United Arab Emirates has shared new tax regulations for the year 2025. With a vision to become a global investment leader and hub for businesses in the Middle East, the UAE is reshaping its policies to modernize its tax system. 

The UAE Finance Ministry introduced a corporate tax update in their Cabinet Decision No. 34, 2025. Under the Federal Decree-Law on the Taxation of Corporations and Businesses, No. 47 of 2022,  it particularly covers QIFs (Qualifying Investment Funds) & QLPs (Qualifying Limited Partnerships). In this blog, we will discuss the new tax rule key provisions in the UAE and the benefits for businesses and investors. 

New Tax Rule In the UAE 2025 – Overview

This update focuses on the subsequent goals:

• Attract local and foreign investments
• Provide clear legal frameworks for investment structures
• Encourage fund management and the real estate sector for excellent future growth
• Support economic diversification other than gas and oil

The low tax rates and multiple exemptions make the UAE’s tax approach competitive. While crafting new tax laws, the government of the United Arab Emirates ensures adherence to international best practices in compliance and transparency.

At this point, it is significant to understand the UAE’s tax dynamics and laws, and for that, it is essential to consult expert tax advisors and consultants. 

Cabinet Decision No. 34 for the Year 2025

The Cabinet Decision No. 34 provides a clear legal framework about how to treat QIFs and QLPs under the UAE’s corporate tax regime. It also refines previous provisions and presents more flexibility for investors and fund managers through streamlined compliance processes, tax benefits, and more explicit exemptions.

Who Can Benefit From Cabinet Decision No. 34

• Asset Management Firms
• Real Estate Investment Trusts (REITs)
• Private Equity Firms
• Venture Capitalists
• International Investors who want to expand or establish their businesses in the UAE

Tax Exemptions for QIFs (Qualifying Investment Funds)

If QIFs meet the given criteria, they can enjoy, under the new tax rules, UAE Corporate Tax Exemptions:

• Their funds remain under 10% of real estate asset value.
• The fund must keep an eclectic ownership structure, with no excessive engagement of ownership among a finite number of investors.

These criteria ensure QIFs are operated and structured in a transparent way that promotes participation from worldwide investors and reduces tax avoidance strategies.

More Flexibility for Ownership Multiplicity Breaches

Flexibility is one of the biggest improvements when it comes to diversity ownership requirements under the new tax rules.

Previously, if a Qualifying Investment Fund breached ownership rules for the time being, for instance, if one investor got a considerable stake, it could fail entirely its tax-exempt status. Under the new legal framework:

• For the first 2 years of establishment, Qualifying Investor Funds are given a grace period to resolve breaches.
• Under an average of 90 days/year, the UAE law gives flexibility that such breaches should not exceed these days or can occur during fund termination or liquidation.

So, this new policy via long-term recognition of temporary changes in investor composition supports stability in the longer run. 

Good Thing!

With this new tax update, the impact of the breach has been limited to investors who are responsible, as it is more of an individual accountability. Get a closer look:

• In case of a breach, only responsible investors will lose the tax exemption on their shares.
• If all conditions are met, QIF funds will retain their status.

It confirms that one investor’s actions will not affect the whole fund, and this is the aim of the current tax update: to safeguard compliant investors and promote transparency. 

Foreign Investors Corporate Tax Registration

With streamlined corporate tax registration, the new tax decision offers more flexibility for international investors. Now, QIFs and REITs foreign investors with 80% or more of their annual income are required to get registered for corporate tax only at the dividend distribution. This is the most alluring aspect of the latest decision. Many institutional investors and global asset managers are interested in the UAE as a business hub. 

Limited Partnerships Tax Transparency

A key addendum to the UAE’s tax terrain is the treatment of limited partnerships. Cabinet Decision No. 34 allows specific partnerships that meet the following requirements to be treated as tax-transparent entities:

• Partners must agree on fair/transparent treatment.
• Limited partnerships don’t have a legal disposition.
• The income is allocated directly to partners without being taxed at the partnership level.

Who Gets the Max Benefits From the UAE’s Updated Tax Rules 2025?

The following groups can benefit more from the latest UAE tax legislation.

• Global fund managers
• Wealth management firms
• REIT sponsors
• Private equity firms
• International investors 

With these tax updates, the UAE provides a haven for investors. So, it is high time to get maximum tax benefits and establish a business in one of the best countries like the United Arab Emirates.