An investment fund in the UAE can be fully exempt from corporate tax — but exemption is decided by the fund's records as much as its structure. Under Article 10 of Federal Decree-Law No. 47 of 2022 and Cabinet Decision No. 34 of 2025 (which replaced Cabinet Decision No. 81 of 2023 for tax periods starting on or after 1 January 2025), a Qualifying Investment Fund must hold regulatory oversight, run investment as its primary business, keep investors out of day-to-day management, and — the new condition — give investors all the information and documents they need to compute their own taxable income (Cabinet Decision No. 34 of 2025; mof.gov.ae, checked September 2026).
TL;DR
- A Qualifying Investment Fund (QIF) is treated as an exempt person for UAE corporate tax if it meets Article 10 of the Corporate Tax Law plus the Cabinet Decision No. 34 of 2025 conditions.
- Cabinet Decision 34 of 2025 removed the old diversity-of-ownership and three-investment-professional conditions and added a duty to provide investors with income-computation information (Cabinet Decision No. 34 of 2025, checked September 2026).
- Exemption is maintained, not granted once: funds must show regulatory oversight, investment business as primary activity, and no investor day-to-day control on an ongoing basis.
- Bookkeeping duties are hard law: accounting records kept for at least 7 years (Federal Decree-Law No. 47 of 2022, Article 56), with investor registers, NAV support and income-attribution schedules behind every report.
- Ancillary activities are tolerated only up to 5% of total revenue in the relevant financial year.
The conditions a fund must document
| Condition | What it requires | What the books must show |
|---|---|---|
| Regulatory oversight | The fund or its manager is supervised by a UAE or foreign competent authority (Article 10, Federal Decree-Law No. 47 of 2022) | Licence, regulatory correspondence, oversight records |
| Investment business primary | Any other activity is incidental or ancillary, within the 5% revenue tolerance | Revenue segmentation: investment vs ancillary income |
| No investor control | Investors do not control day-to-day management | Governance documents, board/manager decisions log |
| Investor information duty | Investors receive all data needed to compute their taxable income (Cabinet Decision No. 34 of 2025) | Per-investor income attribution schedules, distribution statements |
What changed in 2025 and why the books had to change with it
Cabinet Decision No. 81 of 2023 required funds to satisfy diversity-of-ownership thresholds and to be managed by at least three investment professionals; Cabinet Decision No. 34 of 2025 removed both conditions and replaced them with the investor-information condition, applying retroactively to tax periods starting on or after 1 January 2025 (Cabinet Decision No. 34 of 2025, as summarised by PwC Middle East and DLA Piper, checked September 2026). The practical consequence sits squarely in bookkeeping: the fund's finance function must now produce, per investor and per period, the income figures each investor needs for its own return — which requires clean capital-account ledgers, dated distribution records and documented income classification.
What the bookkeeping function actually maintains
- The accounting records themselves — every fund keeps accounting records and supporting documentation for at least 7 years after the end of the relevant tax period (Federal Decree-Law No. 47 of 2022, Article 56).
- The investor register — subscriptions, redemptions and transfers with dates, because the income-attribution schedules depend on them.
- NAV and valuation support — the pricing evidence behind every unit price, retained in the records.
- Income classification schedules — investment income separated from ancillary income, so the 5% ancillary tolerance is demonstrable from the ledger rather than asserted.
- Investor reporting packs — periodic statements carrying the income figures investors need to self-assess, satisfying the Cabinet Decision 34 of 2025 condition.
Funds in DIFC run IFRS reporting with DIFC-registered auditors; the DIFC bookkeeping guide covers that regime specifically.
A quarterly close checklist for fund managers
| Step | Output | Why it matters |
|---|---|---|
| Reconcile custody and bank accounts to the ledger | Matched balances | Audit and regulatory credibility |
| Refresh valuations with dated pricing evidence | NAV support file | Investor reporting accuracy |
| Update the investor register and capital accounts | Per-investor positions | Basis of income attribution |
| Produce income-attribution statements per investor | Investor packs | The Cabinet Decision 34 of 2025 condition |
| Test ancillary revenue share | 5% tolerance check | QIF condition maintenance |
| Archive the period's records | 7-year retention file | Federal Decree-Law No. 47 of 2022, Article 56 |
If the fund holds UAE real estate or operates through a REIT structure, the conditions diverge — confirm treatment before relying on the exemption. The corporate tax reduction guide places the QIF exemption among the lawful 0% routes.
Fund bookkeeping support
Finanshels runs fund-grade books — investor registers, NAV support and income attribution — for UAE investment vehicles and their managers.
Talk to Finanshels about fund bookkeeping
FAQ
Are investment funds exempt from corporate tax in the UAE?
A Qualifying Investment Fund meeting Article 10 of Federal Decree-Law No. 47 of 2022 and the Cabinet Decision No. 34 of 2025 conditions is treated as an exempt person. Exemption depends on continuing to meet those conditions.
What is the 5% rule for UAE funds?
Ancillary or incidental activities must not generate more than 5% of the fund's total revenue in the relevant financial year; above that, the QIF conditions are at risk (Cabinet Decision No. 34 of 2025, as summarised by advisory firms, checked September 2026).
What records must a UAE fund keep?
Accounting records and supporting documentation for at least 7 years after the end of the relevant tax period (Federal Decree-Law No. 47 of 2022, Article 56), plus investor registers and the information packs supplied to investors.
Did the QIF conditions change recently?
Yes: Cabinet Decision No. 34 of 2025 replaced Cabinet Decision No. 81 of 2023 for tax periods starting on or after 1 January 2025, removing ownership-diversity and manager-composition conditions and adding the investor-information condition.
