Ministerial Decision 261 of 2024: Partnerships & Family Foundations Re-examined Under UAE CT

Further clarifying the Corporate Tax treatment for specific business structures, Ministerial Decision No. 261 of 2024, issued on October 28, 2024, brought essential details regarding Unincorporated Partnerships, Foreign Partnerships, and Family Foundations. This decision became effective on June 1, 2023, aligning with the general applicability of the Corporate Tax Law, providing retroactive clarity for these entities.

The core of this decision clarifies the conditions under which an Unincorporated Partnership will not be considered a Taxable Person in its own right. This is vital for maintaining tax transparency where the partners, rather than the partnership itself, are taxed individually.

It outlines criteria such as the partners being identifiable, fulfilling registration requirements, and notifying the Federal Tax Authority (FTA). Similar provisions apply to Foreign Partnerships, ensuring a consistent approach for international structures operating in the UAE.

For Family Foundations, the decision outlines the conditions for them to be treated as an Unincorporated Partnership, which typically results in the beneficiaries being subject to tax rather than the foundation itself.

This includes conditions related to the beneficiaries being natural persons or public benefit entities, and often requires that income that would be considered taxable is distributed within six months from the end of the relevant tax period.

This decision, along with FTA Decision No. 5 of 2025 (effective July 1, 2025), forms a comprehensive framework for the tax treatment and compliance of these unique entity types. Businesses and private wealth managers must meticulously review these provisions to ensure appropriate structuring and compliance.

summary

A deep dive into Ministerial Decision No. 261 of 2024, explaining its impact on the Corporate Tax treatment of Unincorporated Partnerships, Foreign Partnerships, and Family Foundations in the UAE, effective from June 2023.

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