The ultimate goal of earning is not just survival—it's to enjoy the lifestyle you've dreamed of, benefit from financial security, and provide a stable future for your family. However, wealth is not only about luxury and comfort; it's also about smart planning. That includes managing savings, taxes, insurance, investment funds, and more.

Recognizing this, the UAE Ministry of Finance has introduced transformative updates through Ministerial Decision No. (261) of 2024. These changes significantly impact family foundations, unincorporated partnerships, and foreign partnerships, aiming to:

  • Provide greater tax flexibility
  • Simplify compliance
  • Align with global standards

Let's explore how these new tax reforms are reshaping the tax treatment and operational flexibility for partnerships and family foundations in the UAE.

Key Changes in Tax Treatment for Family Foundations and Partnerships

1. Enhanced Tax Treatment for Family Foundations

Previously, only rental and investment income earned by family foundations was tax-exempt. However, under the new reforms, all income earned by family foundations can now be treated as if it were earned by the founder or beneficiaries directly.

This is especially beneficial for entities such as single-family offices or companies entirely owned by the foundation, providing more flexibility in managing assets and reducing the overall tax burden.

2. Option to Apply for Tax-Transparent Status

Family foundations can now apply to be treated as tax-transparent entities, a major advantage for wealth structuring. This means:

  • No need for complex assessments of every family member and asset
  • Simplified tax reporting
  • More predictable and consistent tax treatment

This update allows family foundations with significant UAE-based assets to enjoy streamlined compliance and greater financial efficiency.

3. Alignment with UAE Corporate Tax Framework

The updated regulations allow family foundations and partnerships to operate more seamlessly under the UAE Corporate Tax regime, by:

  • Treating them like partners
  • Allowing continued tax benefits
  • Simplifying cross-border wealth management

This alignment supports multinational families and cross-jurisdictional operations, making UAE a more attractive base for managing global wealth.

4. Positive Impact on Succession Planning

These reforms are a game-changer for succession and legacy planning. By reducing red tape and offering tax transparency, families can now:

  • Transfer wealth between generations more easily
  • Reduce the tax burden on inheritance
  • Focus more on long-term savings and growth

Updates for Unincorporated and Foreign Partnerships

1. Simplified Notification Process

Previously, unincorporated partnerships had to notify the Federal Tax Authority within 20 days of any changes in partnership composition. Under the new law, this has been simplified—you now only need to update this during the annual tax return. This reduces administrative burden and promotes efficiency.

2. Streamlined Tax Treatment for Foreign Partnerships

Foreign partnerships gain a major advantage: if they are considered tax-transparent in their home country, they will also be treated the same way in the UAE—without the need to submit additional supporting documentation.

These partnerships just need to file a simple annual declaration confirming that their tax status hasn't changed.

Why These Reforms Matter

The new reforms bring clarity, flexibility, and global alignment for businesses operating in or through the UAE. Key benefits include:

  • Easier tax compliance and paperwork reduction
  • Better support for international wealth management
  • Stronger structures for succession planning
  • Alignment with global tax transparency standards

Conclusion: Your Next Step Toward Tax Efficiency

These tax reforms reflect the UAE's commitment to fostering a business-friendly environment. Whether you're managing a family foundation, involved in a partnership, or planning your company structure, these updates provide the tools to grow and protect your wealth more effectively.

If you're facing challenges with:

  • Business setup in Dubai
  • Corporate taxation
  • Bookkeeping and auditing
  • Succession planning for family wealth

Make My Firm is here to help. Our expert team offers comprehensive support in auditing, tax compliance, and financial consulting. With deep expertise in UAE's tax laws and corporate structures, we ensure your business is compliant, efficient, and future-ready.

Reach out to Make My Firm today and let our specialists guide you through tax reform benefits and beyond.