On 19 September 2025, the UAE Federal Tax Authority (FTA) issued Public Clarification No. CTP008 on the Corporate Tax treatment of family wealth management structures. This marks a significant step in shaping how the regime around Family Foundations (FFs) and similar entities will evolve. While the Clarification provides welcome certainty in some areas, it also leaves several conceptual questions unresolved.
LLC Not a “Similar Entity”
The FTA has taken a clear stance that a limited liability company cannot apply for FF status because its legal structure is not similar to trusts or foundations: “For the avoidance of doubt, ‘similar entity’ means an entity that has a similar legal structure or character to a foundation or trust, and would, therefore, exclude a limited liability company.”
The doubts around this issue were already highlighted in our earlier research:
- Clarifying “Similar Entities”: Insights from the Family Foundations Guide (May 2025)
- Family Foundation Exemption (multi-jurisdictional research, December 2024)
What remains unclear is what specific attribute of the LLC obstructs similarity treatment. It cannot simply be its separate legal personality, as both DIFC/ADGM foundations and mainland trusts also possess this feature. In our earlier work, we suggested that the key distinguishing attributes of trusts and foundations are:
- property ownership in their own name, but on behalf of another;
- dual status derived from law/regulation or constitutional documents;
- activity bound to settlor/founder’s instructions;
- absence of equity rights for the founder.
FTA’s approach to discretion
Throughout the entire Clarification, the FTA does not consider an option where the conditions under Article 17(1) for transparency treatment are met, the entity applies for FF status, but the FTA rejects the application. This is interesting, because neither the Law nor the by-laws themselves expressly circumscribe the FTA’s discretion in approving or rejecting FF status.
Yet, the Clarification makes it appear that the FTA does not see the situation in this way. Rather, it seems to consider its authority as limited to verifying whether the conditions set out by the legislator and the Minister are satisfied, with no discretion to reject where those conditions are met. This interpretation gives hope to the multiple applicants whose cases are still under consideration.
Income treatment for family members
In the examples provided, the FTA concludes that family members are not subject to Corporate Tax on income from the structure, as such income qualifies as Personal Investment Income or Real Estate Investment Income.
Importantly, this conclusion appears unconditional, i.e. applying even when family members are actively involved in management roles within the transparent structure. As highlighted in our earlier research, such treatment is unusual compared with the approach taken toward similar structures internationally.
The SFO question (Example 3)
In example 3, the FTA examined a structure where an FF holds shares in a Single Family Office (SFO), which in turn holds shares in a HoldCo. The FTA assumed that the SFO is not entitled to FF status, though it did not explain this position.
A possible rationale is that in this case, the SFO provided wealth management services both to the FF and to one SPV in the family structure. But if the SFO were instead funded directly by FF contributions to cover its costs, would the analysis change?
The key question becomes whether the assistance provided to SPV 6 (a Real Estate SPV) constitutes “Business” if conducted directly by a family member. If not, the SFO could arguably qualify for FF status. Or doesn’t it?
Final thought
CTP008 resolves some long-standing doubts, but it also leaves important conceptual questions open, particularly around what makes an entity “similar” to a foundation or trust, and how service entities such as SFOs interposed in a holding chain under an FF should be treated.
As the practice evolves, both families and advisors will need to continue testing these boundaries and, in some cases, seek further clarifications from the FTA.
The disclaimer
Pursuant to the MoF’s press-release issued on 19 May 2023 “a number of posts circulating on social media and other platforms that are issued by private parties, contain inaccurate and unreliable interpretations and analyses of Corporate Tax”.
The Ministry issued a reminder that official sources of information on Federal Taxes in the UAE are the MoF and FTA only. Therefore, analyses that are not based on official publications by the MoF and FTA, or have not been commissioned by them, are unreliable and may contain misleading interpretations of the law. See the full press release here.
You should factor this in when dealing with this article as well. It is not commissioned by the MoF or FTA. The interpretation, conclusions, proposals, surmises, guesswork, etc., it comprises have the status of the author’s opinion only. Furthermore, it is not legal or tax advice. Like any human job, it may contain inaccuracies and mistakes that I have tried my best to avoid. If you find any inaccuracies or errors, please let me know so that I can make corrections.
