UAE Branch Tax Rules

UAE Corporate Tax & Investment Managers – Rules & Exemptions

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Below is a high-level overview of how UAE corporate tax (CT) applies to investment managers operating in the UAE under the Federal Decree-Law No. 47 of 2022 (and related Ministerial Decisions).

This is a general summary, not legal advice—always check with a UAE tax professional for your specific circumstances.

General Rule: UAE-Resident Businesses are Subject to CT

  1. UAE-Resident Companies
    • Any UAE-incorporated entity, including an investment management firm, is considered resident for UAE CT.
    • Such entities are subject to 9% corporate tax on annual taxable profits exceeding AED 375,000, with 0% applicable on the first AED 375,000 of taxable profit.
  2. UAE Branches of Foreign Companies
    • A foreign investment manager operating through a branch in the UAE would typically be subject to CT on the branch profits attributable to the UAE activities.

Potential Exemptions or Special Regimes

  1. Qualifying Free Zone Person
    • If the investment manager is registered in a Free Zone (e.g., DIFC, ADGM) and meets the “Qualifying Free Zone Person” (QFZP) criteria, it may benefit from a 0% CT rate on “Qualifying Income.”
    • However, you must satisfy strict substance, independence, and activity requirements (including not generating income from the UAE mainland unless it is “passive” or otherwise allowed). If the manager’s clients or activities are primarily in the mainland, the 9% rate likely applies.
  2. Qualifying Investment Fund Exemptions
    • The law provides an exemption for “Qualifying Investment Funds”, but generally the fund itself might be exempt—not necessarily the manager who earns fee income.
    • In most structures, the manager is a separate legal entity providing services for a fee, so it would not be exempt unless it also meets other QFZP or statutory exemption criteria.
  3. “No PE” for Offshore Funds vs. Manager Profits
    • The concept of a “no permanent establishment (PE)” safe harbor (sometimes loosely compared to the UK “investment manager exemption”) is about protecting non-resident investors/funds from UAE tax.
    • That does not exempt the UAE-based manager’s own profits from UAE corporate tax; it simply prevents the offshore fund from being taxed in the UAE. The manager’s own income (fees, performance fees, etc.) is still subject to normal UAE CT rules.

Conclusion: Most Investment Managers Pay UAE Corporate Tax

  • Yes, in general, if you run an investment management or fund management business from the UAE, you are subject to UAE corporate tax on the profits of that business, unless you qualify for a free zone or other specific exemption.
  • Even in a free zone (e.g., DIFC or ADGM), you only get the 0% rate on “Qualifying Income” if you meet all conditions of being a Qualifying Free Zone Person.
  • Simply providing investment management services (charging management or performance fees) does not automatically grant an exemption—you would file corporate tax returns and be taxed at 0% on your first AED 375,000 of profits and 9% on the excess.

Bottom line:

  • If you are a mainland or onshore investment manager, expect to pay UAE CT at the standard rates.
  • If you are in a free zone and meet QFZP criteria, you may enjoy a 0% rate on qualifying income, but must comply with free zone and UAE CT rules to maintain that status.
  • The law’s safe harbor that protects offshore funds from having a UAE PE does not exempt the UAE manager’s own fee income from CT

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