UAE Introduces Tax Transparency for Holding Companies in Family Foundations
June 3, 2025
An opportunity for high-net-worth families to streamline succession planning and optimise cross-border tax compliance.
The UAE continues to evolve as a global wealth management hub, with its latest reform offering a significant step forward for family foundations and holding structures. The Ministry of Finance has introduced a mechanism allowing holding companies owned by qualifying family foundations to elect tax transparency, aligning local rules more closely with international wealth structuring norms.
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This change is not just administrative—it’s strategic. It gives ultra-high-net-worth individuals, family offices, and private clients a new tool for succession planning, tax optimisation, and cross-border compliance.
What Is Tax Transparency for Holding Companies?
Under the UAE’s corporate tax regime, most entities are taxed at a headline rate of 9% on profits exceeding AED 375,000. However, this new development allows holding companies owned by approved family foundations to opt for “tax-transparent” status, meaning:
- Profits are not taxed at the company level
- Income is attributed directly to the foundation’s beneficiaries
- No corporate tax is payable by the holding company
In effect, the entity becomes a "flow-through" for tax purposes, much like similar vehicles in the UK or US trust and partnership models. This aligns with the UAE’s broader commitment to tax neutrality for legitimate private wealth structures.
Why This Matters for Family Offices and Wealth Managers
At Mosaic Chambers Group, we work with clients who require flexibility, confidentiality, and robust compliance across multiple jurisdictions. This update achieves all three.
1. Enhanced Control and Oversight
By allowing direct income attribution, families retain a clear line of sight over their holdings without triggering difficult corporate tax liabilities or double taxation. This supports long-term family governance and oversight.
2. Streamlined Succession Planning
Transparent holding companies integrate smoothly into wills, trusts, and multi-generational planning tools. It becomes easier to pass on ownership and control while remaining compliant with local laws and international tax expectations.
3. Simplified Tax Filings
Rather than preparing corporate tax returns for each entity, income is reported by the beneficiaries, making annual compliance more manageable and, in some cases, reducing overall administration costs.
What Are the Conditions?
Not every family foundation will automatically qualify for this election. To take advantage of the new rule, the following key conditions must be met:
- The family foundation must be registered and recognised under UAE law
- Transparent status must be elected formally with the UAE Ministry of Finance
- Detailed ownership and income allocation documentation must be maintained
- The structure must be managed from within the UAE
Importantly, these requirements are designed to prevent misuse and ensure that legitimate private wealth structures benefit, while still aligning with OECD transparency standards.
Potential Cross-Border Tax Implications
Families with beneficiaries based outside the UAE must tread carefully. While the UAE may no longer impose corporate tax on the holding company, beneficiaries in other jurisdictions may face tax liabilities based on their share of income, even if distributions haven’t been made. This makes international tax advice essential.
Strategic Planning Opportunity
This reform offers a unique opportunity to:
- Revisit legacy structures that may be inefficient or outdated
- Consolidate ownership across multiple holding entities
- Prepare for future generational transitions with confidence
Whether you're managing a Gulf-based family enterprise or overseeing international assets across Europe, Asia, and the US, this election mechanism gives you a new layer of flexibility, without sacrificing legal clarity or compliance.
Final Thoughts
The UAE’s tax transparency election is more than a technical rule change—it’s a powerful tool for wealth preservation, efficient tax planning, and multi-jurisdictional control. Families and their advisers should review existing structures now to see if this opportunity aligns with their long-term goals.
If you’re advising a UAE-based family foundation—or managing one—now is the time to act. Contact Mosaic Chambers Group to explore how this change could enhance your structure and secure your legacy.
Financial reporting might not be the most glamorous topic, but in the world of tax, it’s the backbone of everything. If your accounts aren’t accurate, your tax filings won’t be either. That means penalties, audits, and missed opportunities. This May, the UAE Ministry of Finance issued Ministerial Decision No. 84 of 2025, replacing the earlier Decision No. 114 of 2023. It raises the bar for businesses under the UAE Corporate Tax regime when it comes to how they prepare and submit their financial statements. Whether you’re a UAE-based entrepreneur, part of a family business, or advising HNW clients, here's what you need to know—and what to do next. Why Financial Reporting Is Critical in the UAE Since the launch of the UAE’s Corporate Tax regime in 2023 (at a standard 9% rate on profits above AED 375,000), accurate financial records have gone from "nice to have" to "non-negotiable." Ministerial Decision No. 84 of 2025 makes it even clearer: proper financial statements aren’t just paperwork. They’re essential for: Corporate tax returns Maintaining Qualifying Free Zone Person (QFZP) status Group structuring or business exits Investor confidence and bank funding What’s New in Ministerial Decision No. 84? 1. IFRS Is Now the Standard—No Excuses All financial statements must be prepared using International Financial Reporting Standards (IFRS). The days of using simplified or local formats are over. This may impact free zone companies and smaller entities used to minimal compliance. 2. Audited Financials Now Required for More Entities More businesses will now need audited accounts. This includes: Large businesses (by revenue or assets) Qualifying Free Zone Persons (QFZPs) Holding companies and entities within group structures Even if you weren’t previously required to undergo a statutory audit, corporate tax obligations now bring that expectation to your door. 3. Record Retention Obligations All financial records—statements, ledgers, invoices, and backup data—must be retained for at least 7 years and be ready for inspection by the Federal Tax Authority (FTA) at any time. Who Needs to Pay Attention? You’re affected if: You own or operate a mainland or free zone company. You’re a high-net-worth individual with a holding company or family office in the UAE. You’re part of a group structure, either local or cross-border. You want to maintain 0% tax status as a QFZP. You're planning to sell, restructure, or raise capital and need a clean financial trail. What You Should Do Next Here are your action steps: Audit check – Confirm if your business now falls under mandatory audit requirements. Align with IFRS – Ensure your accounts are being prepared to full IFRS standards (not partial or simplified versions). Update systems – Store records digitally and back them up securely for a minimum of 7 years. Speak to your adviser – If you’re unsure, now’s the time to get professional input before issues arise. Final Thoughts Ministerial Decision No. 84 of 2025 is part of the UAE’s wider move towards high-quality, internationally respected tax standards. It's a strong reminder that clear, reliable financial records are more than admin—they’re your strongest protection in a tax environment that’s getting sharper. Need help understanding what this means for your business? Contact us today to book a confidential call with one of our tax experts. If you’re a legal, accounting, or investment professional looking to refer clients, then enquire about becoming an Introducer with us. More information here.
The United Arab Emirates (UAE) is one of the most attractive destinations in the world for entrepreneurs, investors, and multinational businesses. With its business-friendly environment, strong legal framework, and strategic location, the UAE offers the ideal conditions for companies looking to launch or grow their operations in the Middle East and beyond. Why Set Up a Business in the UAE? Strategic Global Access Located between Europe, Asia, and Africa, the UAE offers excellent connectivity to over 2 billion consumers and access to fast-growing global markets. Favourable Tax Policies The UAE has no personal income tax and a low 9% corporate tax (only applicable to profits over AED 375,000), making it a highly tax-efficient base for international businesses. Robust Infrastructure From modern airports and ports to advanced telecommunications and transport systems, the UAE offers everything needed for smooth business operations. Flexible Company Structures Choose between Mainland, Free Zone, or Offshore setups, depending on your business model, ownership preferences, and target market. Key Steps to Start a Business in the UAE 1. Define Your Business Activity Your chosen activity determines which licences and approvals are needed. Some sectors, such as financial services or education, require additional authorisation from regulatory bodies. 2. Choose the Right Business Structure Choosing the right business structure in the UAE is essential because it sets the foundation for how your company operates, grows, and complies with local laws. The structure you select affects everything from ownership rights and liability to tax efficiency and the ability to trade or raise capital. With the UAE offering various options tailored to different business needs, getting it right from the start can save time, reduce risk, and support long-term success. 3. Mainland vs Free Zone Mainland companies can trade directly within the UAE and with government entities. Free zone companies enjoy tax benefits and 100% repatriation of profits, but if a freezone company is seeking market entry into mainland UAE, you would need to consider a restructuring. Business Setup Process: Step-by-Step Select Your Activity – Choose from a list of permitted activities that align with your goals. Reserve a Business Name – Must follow UAE naming rules and avoid restricted terms. Get Initial Approvals – From the Department of Economic Development (DED) or your chosen free zone authority. Draft the MoA (Memorandum of Association) – Required for LLCs; outlines ownership, structure, and responsibilities. Secure Office Space – This is mandatory for most businesses. Free zones may offer co-working or virtual office options. Apply for a Trade Licence – Based on your activity: Commercial, Industrial, or Professional. Register the Company – Submit final documents to the relevant authority. Open a Corporate Bank Account – Required to legally operate and receive payments. Apply for Visas – For owners, employees, and dependents. Compliance and Legal Requirements VAT Registration – Required for businesses earning over AED 375,000 per year. Economic Substance Regulations (ESR) – Applies to specific sectors and requires companies to show they have substantial operations in the UAE. Ultimate Beneficial Ownership (UBO) and AML Compliance – Businesses must maintain transparent ownership records and follow anti-money laundering regulations. Beyond Setup: What Else to Consider Hiring & Workforce Planning Mainland companies must comply with Emiratisation quotas in certain industries. All employers must issue legal contracts, offer medical insurance, and follow UAE labour laws. Cultural Awareness Strong personal relationships and respect for Islamic values are key to doing business in the UAE. Observing local customs will help build trust and long-term partnerships. Intellectual Property (IP) Protection Registering your brand, trademarks, and IP rights with the Ministry of Economy is essential for protecting your business assets. Access to Funding The UAE offers a wide range of funding solutions, from government grants and incubators to VC firms and SME loan schemes. Regional and Global Expansion Once you’re established in the UAE, expansion into GCC countries and global markets is seamless thanks to the UAE’s extensive trade networks and logistics infrastructure. Why Choose Mosaic Chambers Group? At Mosaic Chambers Group, we do more than set up companies — we provide end-to-end support for entrepreneurs, investors, and established businesses. Whether you’re setting up in Dubai, Abu Dhabi, or across borders, we’re by your side every step of the way. What Makes Us Different? Global Reach With operational hubs in Dubai and the UK, we offer relocation and corporate services that extend well beyond the UAE, supporting clients in global markets. More Than a Setup Company Company formation is only one part of our work. We deliver aftercare, compliance monitoring, visa processing, strategic advisory, and personalised relocation support. Trusted Long-Term Partners Our clients enjoy a dedicated advisor and single point of contact — someone invested in their long-term success, not just their initial launch. Unmatched Quality of Advice Others may advertise the lowest setup costs. But low prices often mean low-quality support. Our advice is thorough, strategic, and built to save you from costly mistakes and delays. DOWNLOAD OUR FREE RELOCATION GUIDE At Mosaic Chambers Group, we support clients across borders—not only in the UAE, but around the world. With hubs in both Dubai and the UK, our relocation and corporate services extend globally, making us the trusted partner for businesses serious about long-term growth. Get in touch below to find out more.