The Federal Tax Authority (“FTA”) released an updated version of its Corporate Tax Guide on the Taxation of Family Foundations (CTGFF1) (the “FTA Guide”) in June 2026. The updated guide provides important clarifications on the application of the UAE Corporate Tax regime to private wealth structures, particularly in relation to eligibility for tax transparency and the treatment of multi-tier structures.
The key clarifications will be relevant for all existing or proposed Family Foundation structures and should be reviewed carefully to ensure structures are fully compliant for the purposes of the UAE Corporate Tax Law (“CT Law”).
Treatment of Limited Liability Companies (“LLCs”)
As already confirmed in the FTA’s Public Clarification CTP008, LLCs cannot themselves apply for fiscally transparent treatment on the basis of being treated as a “similar entity” to a foundation or trust.
The FTA Guide has further clarified and reinforced this position, drawing a necessary distinction between structures established for the preservation and administration of family wealth and commercial companies. As such, any LLCs used as holding vehicles for a family wealth structure, cannot themselves qualify as a Family Foundation. LLCs would only be able to benefit from the Family Foundation regime where they are subsidiary vehicles, wholly owned and controlled by a trust or Family Foundation which itself can qualify under Article 17 of the CT Law as an Unincorporated Partnership.
Multi-Tier Structures & Jointly Owned SPVs
The FTA Guide has clarified that where a Family Foundation meets the beneficiary condition in Article 17(1)(a) of the CT Law (namely where it is established for the benefit of identified or identifiable natural persons, a public benefit entity, or both), a juridical person wholly owned and controlled by that Foundation will also be considered to meet the beneficiary condition.
The FTA Guide also confirms that the ownership and control requirements may be satisfied collectively by multiple qualifying Family Foundations such that a juridical person wholly owned and controlled by more than one Family Foundation may apply to the FTA to be treated as an Unincorporated Partnership and thus benefit from fiscal transparency.
This is a material change from the previous version of the guide, which concluded a jointly owned SPV was not eligible for Unincorporated Partnership treatment where it was not wholly owned and controlled by a single Family Foundation.
For co-investment vehicles, jointly held real estate SPVs or shared holding structures between two family groups, this presents a welcome development and provides an opportunity to obtain tax transparency, provided each entity satisfies all conditions set out in Article 17(1) of the CT Law.
Asset Transfers and acquisitions / disposals by a Family Foundation
Where a founder or settlor is a Related Party to the Family Foundation, any transfer of assets must be made at arm’s length as if the parties were entirely unrelated. Any resulting gain or loss may be subject to Corporate Tax unless the transferor is a natural person contributing Personal Investments or Real Estate Investments, in which case no Corporate Tax should arise. This is a helpful confirmation for founders who contribute investment portfolios or UAE real estate to their Family Foundation.
The FTA Guide clarifies that where a fiscally transparent company subsequently becomes fiscally opaque, the base cost of its assets would remain unaffected. This is relevant in the context of reorganisations, acquisitions and disposals of entities by Family Foundations.
Family Office
The FTA Guide confirms that the tax-transparent treatment available to a Family Foundation under Article 17 of the CT Law does not generally extend to a Single-Family Office (“SFO“) or Multi-Family Office (“MFO“).
A Family Foundation may qualify for transparent treatment because it is established for the preservation and administration of family wealth and does not carry on a Business or Business Activity. By contrast, an SFO or MFO typically provides investment management, advisory, administrative, governance, and other support services, which constitute taxable business activities under the CT Law. As a result, a family office will generally be subject to Corporate Tax at 9% on its taxable income, including management and service fees. Any services provided to the Family Foundation, underlying entities, or family members must also be charged on an arm’s-length basis in accordance with the UAE transfer pricing rules.
A different tax treatment may apply where the family office is established in a Free Zone and carries out qualifying regulated activities, such as wealth management under the supervision of the DFSA in DIFC or the FSRA in ADGM. In such cases, the family office may be entitled to benefit from the 0% Corporate Tax rate that applies to Qualifying Free Zone Person, subject to meeting all relevant conditions.
Key Takeaways
The June 2026 update does not alter the underlying policy of the UAE Family Foundation regime. Rather, it provides additional clarity on how the existing rules apply to common private wealth structures. The most significant developments are the specific exclusion of LLCs from the definition of a “similar entity”, the additional guidance on multi-tier structures, and the introduction of dedicated guidance relating to transfers to Family Foundations, changes in ownership of juridical persons and family offices.
Collectively, these amendments provide greater certainty for taxpayers operating Family Foundation structures while reinforcing the importance of analyzing ownership, control and activities on an entity-by-entity basis.
Key Contacts
Rachel Fox, Partner, r.fox@tamimi.com
Midya Omar, Senior Tax Advisor, m.omar @tamimi.com