Introduction
The UAE’s Ministry of Finance (MoF) has recently issued a new Public Clarification (CTCPC7) on the Corporate Tax treatment of Family Wealth Management Structures. This clarification, effective from October 2025, aims to ensure that family offices and related entities are taxed fairly while maintaining the UAE’s commitment to being a transparent and competitive business hub.
Key Highlights of the Clarification
1. Definition of Family Wealth Management Structures
The clarification defines Family Wealth Management Structures (FWMS) as entities established to hold, manage, and protect family assets — including investments, real estate, and shares — for succession and long-term family planning purposes.
These entities often operate as holding companies or family offices under UAE law.
2. Corporate Tax Applicability
Under the new clarification:
- FWMS are subject to Corporate Tax if they are carrying out business or commercial activities beyond asset holding or wealth preservation.
- Passive income, such as dividends, capital gains, and rental income, may be exempt if it meets the participation exemption or other qualifying criteria.
- Active operations (such as advisory, investment management, or trading) will fall under the standard 9% corporate tax rate.
3. Exemption Criteria
A family entity can apply for exemption from Corporate Tax if it satisfies these conditions:
- The entity is wholly owned by natural persons (family members).
- Its activities are limited to managing or holding family assets.
- It does not engage in commercial activities beyond what is necessary for managing family wealth.
- It complies with reporting and documentation requirements issued by the FTA (Federal Tax Authority).
4. Documentation and Compliance
To maintain compliance and avoid tax penalties, entities must:
- Maintain clear ownership and governance records.
- File annual Corporate Tax returns (even if exempt).
- Prepare audited financial statements if required by law.
- Keep transfer pricing documentation if transactions occur between related parties.
Why This Matters
This update provides clarity and flexibility to wealthy families managing assets through structured entities. It ensures transparency while allowing legitimate wealth management structures to benefit from tax relief — promoting trust, stability, and long-term succession planning within the UAE’s evolving corporate tax framework.
What Businesses Should Do Now
- Review your structure: Evaluate whether your family office or holding entity falls under this definition.
- Consult tax advisors: Determine if your entity qualifies for exemption or if it must register for corporate tax.
- Stay compliant: File accurate tax returns and maintain proper documentation to avoid penalties.
Conclusion
The UAE continues to refine its corporate tax landscape with the goal of balancing economic competitiveness and regulatory compliance. The latest clarification for Family Wealth Management Structures reflects the government’s commitment to supporting family enterprises while maintaining international transparency standards.
As the UAE’s tax regime evolves, staying informed and compliant will remain key to sustainable financial growth.