The UAE’s corporate tax panorama keeps evolving, and with the issuance of the Corporate Tax Guide for Family Foundations (CTGFF1) in May 2025, more readability has been added to the taxation of personal wealth systems. This official guide focuses on how family foundations, both domestic and foreign, are dealt with under the Corporate Tax UAE regime and the unique compliance requirements they need to meet. This blog will discuss the Corporate Tax Guide CTGFF1 , presenting vital insights for founders, trustees, advisors, and beneficiaries managing or establishing family foundations in the UAE.
Overview- Corporate Tax Guide (CTGFF1)May 2025
The CTGFF1 Corporate Tax Guide is a specialized publication issued in May 2025, focusing exclusively on the UAE Family Foundations Tax 2025 framework. It explains how Family Foundations fit within the broader Corporate Tax Law, which came into effect on 1 June 2023 under Federal Decree-Law No. 47 of 2022.
The guide is designed for individuals concerned with wealth planning, succession, and asset protection through legal systems like foundations and trusts. It also serves as a reference for tax experts navigating the evolving regulatory environment.
Legal Foundations and Purpose
At the heart of the Corporate Tax Guide for Family Foundations are the subsequent legislative instruments:
- Federal Law No. 5 of 2018 on public-benefit entities
- Ministerial Decision No. 261 of 2024, which sets out the guidelines for unincorporated partnerships and family foundations.
- Relevant articles from the Corporate Tax Law, specifically Article 17
These legal reassertions outline how family foundations are taxed, how they will observe for financial transparency, and what responsibilities they need to meet to stay compliant.
Status of Family Foundations Under Corporate Tax Law
While not explicitly defined as legal entities under UAE civil law, family foundations are dealt with as juridical individuals for the functions of taxation. The Corporate Tax UAE CTGFF1 framework allows them to use it for status as an unincorporated partnership, thereby turning it into a fiscally transparent entity—meaning tax is assessed at the level of the individual beneficiaries rather than at the entity level.
Types of Entities Recognized as Family Foundations
Entities that can fall under the term “family foundation” include:
- Domestic foundations
- Trusts (incorporated or unincorporated)
- Foreign foundations or trusts with UAE property or beneficiaries
The treatment of each entity depends on its legal structure and operational purpose.
Fiscal Transparency: Key Benefits and Conditions
One of the major advantages offered under CTGFF1 Corporate Tax Guide is the possibility for qualifying family foundations to be taken into consideration fiscally transparent, consequently avoiding corporate-tax altogether.
To achieve this, the foundation must meet 5 specific conditions, according to Article 17(1):
- Beneficiary Condition—The beneficiaries must be identifiable natural-persons or public benefit entities.
- Principal Activity Condition—Activities must be limited to managing assets and investments.
- No Business Activity Condition—Foundations must not engage in commercial enterprise operations.
- No Tax Avoidance Condition—The main purpose should not be tax avoidance.
- Distribution Condition—If public benefit entities are beneficiaries, well-timed distributions need to occur.
Beneficiaries: Who Can Be Included?
The guide defines two types of eligible beneficiaries:
- Identified beneficiaries—named within the foundation’s governing documents.
- Identifiable beneficiaries—members of a defined group (e.g., children, grandchildren).
There are no restrictions on the range of beneficiaries or their relationships, presenting flexibility in structuring one’s own circle of relatives’ wealth.
Principal Activity Restrictions
To qualify for fiscal transparency under the Corporate Tax UAE CTGFF1 regime, a family foundation’s primary purpose must be investment management. Activities can include:
- Buying and selling stocks, bonds, or real estate
- Managing family assets or charitable funds
- Paying expenses and distributing income to beneficiaries
Operating businesses—like owning a retail shop or hotel—disqualifies the foundation from transparency status.
Avoiding Tax Avoidance Classification
While applying for an unincorporated partnership, status isn’t always taken into consideration for tax avoidance; the main purpose of the family foundation should align with asset maintenance and management—not the reduction of tax liabilities.
Foreign Foundations and UAE Nexus
Foreign entities also can qualify underCTGFF1 if they:
- Manage UAE-primarily based assets.
- Have UAE-resident beneficiaries
- Satisfy the five required conditions.
This inclusion broadens the scope of the UAE Family Foundations Tax 2025 policy, making the UAE a competitive jurisdiction for global wealth management.
Multi-Tier Structures and Related Entities
Foundations frequently hold shares in other entities, such as investment-holding companies. Under CTGFF1, any juridical-person wholly owned and controlled by a family foundation may additionally apply for unincorporated partnership status. Each layer needs to meet the eligibility situations independently.
Ongoing Compliance: Annual Confirmation
Even after approval, the foundation should remain obedient by filing an annual confirmation within 9 months of the end of each tax period. This confirmation assures the FTA that the Foundation meets 5 qualifying conditions.
Consequences of Non-Compliance
Failure to meet the condition will cause the foundation to lose its financial transparency and be treated as a taxable entity from the beginning of the non-compliant tax period. Moreover, any related-entities will also lose their tax-exempt status.
Summary
The Corporate Tax Guide for Family Foundations (CTGFF1) represents a significant step within the UAE’s efforts to integrate private-wealth structures into its tax framework without undermining their intended purpose. By presenting a clear pathway to fiscal transparency, the UAE Family Foundations Tax 2025 regime guarantees both flexibility for families and compliance with international-standards.
How ebs Chartered Accountants in Dubai Can Help:
ebs Chartered Accountants can assist Family Foundations with tax registration, compliance assessments, and filing under the Corporate Tax Guide ( CTGFF1) to ensure optimal tax treatment and regulatory alignment in the UAE.
FAQs
What is CTGFF1 in the UAE tax framework?
CTGFF1 is the Corporate Tax Guide issued in May 2025 for the taxation of UAE Family Foundations.
Can UAE Family Foundations apply for tax exemption?
Yes, they can apply for fiscal transparency if they meet specific conditions under Article 17.
Who qualifies as a beneficiary in a Family Foundation?
Beneficiaries can be identified or identifiable natural persons or public benefit entities.
What happens if a Family Foundation fails to comply with CTGFF1 rules?
It will lose its tax-transparent status and become subject to Corporate Tax from the start of the non-compliant period.