Qualifying Investment Fund UAE: Article 10 Tax Exemption

To encourage investments for economic growth, investment funds can seek tax relief from the UAE corporate tax if they meet certain conditions specified by the law.

Under Article 10, this exemption is also conditional and does not apply automatically.

A Qualifying Investment Fund is an investment vehicle and exempted when it:

• Has as its principal activity the pooling of investor funds
• Operates under the supervision or regulatory oversight of a competent authority in the UAE
• Invests funds in accordance with a defined investment policy
• Satisfies ownership and investor related conditions as defined in the Law, and
• Is subject to application and approval by the FTA required and ongoing compliance

Exempt status applies prospectively from the approved Tax Period.

The law itself does not define one single authority. Instead, “competent authority” refers to the relevant UAE regulator that has legal jurisdiction over the fund.

In practice, jurisdiction can fall under any of the following:

• The Securities and Commodities Authority (SCA) for mainland investment funds
• The Dubai Financial Services Authority (DFSA) for funds established in the Dubai International Financial Centre (DIFC) or the financial free zone
• The Financial Services Regulatory Authority (FSRA) for funds in Abu Dhabi Global Market (ADGM)

However, the Corporate Tax Law uses the general blanket term of competent authority because it depends on where the fund is established, and under which regulatory framework it operates.