In Episode 6 of the Rethink Corporate Tax podcast series, Neil Guthrie and Keerthi Voodimudi examine the implications of UAE corporate tax for foundations—a key component of the region’s wealth management and succession planning framework.
With more than 600 foundations already established in the UAE (particularly in DIFC, ADGM, and RAK ICC), understanding their treatment under the new CT regime is essential for family offices, advisors, and high-net-worth individuals.
Key points covered include:
- The definition and purpose of foundations, including their orphan structure and asset-holding roles
- How foundations fall within the scope of corporate tax, despite not being commercial entities
- Conditions for a Family Foundation to qualify for a 0% tax rate under the legislation
- Three potential layers of CT insulation for foundations:
- 0% CT rate for qualifying Free Zone entities
- Exemptions for passive income (e.g. dividends, capital gains)
- The option to be treated as an unincorporated partnership for tax purposes (fiscal transparency)
- Full compliance requirements: registration, annual filings, audited accounts, and adherence to transfer pricing and economic substance obligations
- Planning considerations for electing tax status and assessing eligibility for participation exemptions
While foundations may benefit from multiple layers of tax neutrality, full compliance is non-negotiable. Structuring decisions should be backed by proactive modelling and a clear understanding of forthcoming cabinet decisions.
Listen to Episode 6 for practical guidance on how UAE-based foundations can remain compliant, tax-efficient, and future-ready under the CT regime.
