What the UAE’s New FTA Clarification Means for Family Wealth Management and Tax Compliance

The UAE’s Federal Tax Authority (FTA) has issued long-awaited guidance on the tax treatment of family wealth-management structures, addressing a grey-area under the federal corporate tax regime. The clarification provides critical certainty for family offices and foundations, shaping structuring, compliance and succession strategy in the UAE.

The UAE’s Federal Tax Authority (FTA) has issued long-awaited guidance clarifying the corporate tax treatment of family wealth-management structures, providing long-overdue certainty for family offices, private foundations, and succession vehicles.

The document provides much-needed certainty for family wealth structures by outlining which entities can qualify as tax-transparent, helping them avoid corporate taxation. It establishes clear governance, ownership, substance, and documentation requirements, while clarifying how investment income, distributions, and intra-family transfers are treated. By explaining when foundations and family offices may be taxable or tax-neutral, the guidance enables advisers and high-net-worth individuals to confidently review structures, plan succession, and navigate cross-border tax considerations.

In this article, we examine the UAE’s new corporate tax guidance for family wealth structures, outlining eligibility for tax transparency and key compliance conditions. We also assess the implications for succession planning, cross-border structuring, and the growing family office ecosystem in the UAE.

Regulatory context

The UAE’s rollout of its federal corporate tax regime, under Federal Decree‑Law No. 47 of 2022 (hereinafter “Decree 47”) on the Taxation of Corporations and Businesses, marked a significant shift toward transparency, international alignment the FTA and enhanced oversight.

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To support the implementation, has progressively published public clarifications, guidance and illustrative examples, aligning domestic practice with global tax governance (for example under the Organisation for Economic Co‑operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) standards. Family offices and foundations have become focal points for such guidance given the large capital flows and complexity of ownership structures they represent.

Hence, this latest clarification signals not just technical refinement, but the FTA’s commitment to providing workable certainty to wealth-structuring in the UAE.

Background: The UAE corporate tax regime and family wealth-structures

Introduction of the corporate tax regime

Decree 47 introduced a federal corporate tax system, applying a standard rate of 9 percent on business profits exceeding AED 375,000 (approximately US$102,096), with special reliefs for free-zone persons under certain conditions. The regime came into effect June 2023 for many entities, bringing the UAE firmly into the global tax-compliance fold.

Rise of family wealth-management structures in the UAE

Against this backdrop the UAE has become a vibrant location for family offices, foundations and other family-wealth vehicles. Designed for investment holding, succession planning and asset management, these structures often span jurisdictions and asset classes, raising questions about how they fall under the corporate tax law.

Why clarification was needed

Before the FTA’s recent guidance, many family-wealth entities faced ambiguity: should they be treated as separate taxable persons or as tax-transparent “pass-through” vehicles? The lack of clarity presented risks in structuring, reporting, cost allocation and cross-border tax issues (including treaty access and substance-related scrutiny).

Especially for advisers and high-net-worth individuals (HNWIs) managing inter-generational assets, certainty in tax treatment is key.

The FTA’s public clarification: Scope and main guidance

Scope and coverage

On September 19, 2025, the UAE’s FTA issued the Public Clarification CTP008 on the Corporate Tax Treatment of Family Wealth-Management Structures (hereinafter the “clarification”).

It covers structures such as family foundations, holding vehicles, single-family offices (SFOs) and multi-family offices (MFOs), as well as multi-tier ownership chains and family-member beneficiaries.

Core guidance

• Legal personality and transparency: Foundations or trusts without separate legal personality are automatically tax-transparent (meaning, not a taxable person in their own right) if they meet the relevant conditions of Article 17 of the Corporate Tax Law.
• Separate legal personality entities (for example a foundation with formal personality): May apply to the FTA to be treated as tax-transparent if they satisfy the conditions under Article 17(1).
• Principal activity matters: If the entity carries on active business or commercial operations rather than passive wealth-holding or investment, it will likely be treated as a taxable person.
• Multi-tier structures: Holding vehicles or lower-level entities wholly owned by a transparent family foundation (directly or indirectly via other transparent entities) may themselves qualify for transparency.
• Family offices: SFOs/MFOs that do not meet transparency conditions will be taxable on their full income; if they are free-zone persons and carry on regulated wealth-/investment-management services they may qualify for 0 percent corporate tax on qualifying income, subject to regulatory oversight.

Key take-aways for family wealth-management structures

Conditions for transparency and compliance

To qualify for tax-transparency status under Article 17, entities must ensure:

• Ownership/trust structure clearly identifies natural-person beneficiaries or public-benefit entities;
• Their purpose is investment/asset-holding or succession planning, not primarily tax avoidance;
• They do not carry on commercial business activities;
• They apply to the FTA (if applicable) or meet automatic transparency criteria (in trusts); and
• Governance, substance and documentation support the pass-through treatment (board decisions, ownership registers, audit records).

Practical obligations

Entities should:

• Maintain evidence of decision-making, record-keeping and management in the UAE;
• Evaluate their income profile: passive investment income may qualify for personal investment income treatment, whereas active business income may create exposure;
• Check eligibility for free-zone reliefs (for wealth-management activities) if relevant; and
• Consider multi-tier chains carefull, since a breach at one level may disqualify transparency for the entire chain.

Risks of non-compliance

If the transparency conditions are not met:

• The entity may become a taxable person, subject to 9 percent corporate tax on taxable income;
• Remuneration for services must be at arm’s length, and for unregulated family-office activity in a free zone, 0 percent relief may not apply; and
• Family-member beneficiaries may face corporate tax if they receive income from a vehicle that is taxable and constitutes business income (rather than personal investment).

Moreover, reputational and structuring risks also escalate, since clarity now allows advisers to identify and corrective-shift structures ahead of audits or regulatory scrutiny.

Strategic implications for family offices and global investors

Succession and estate planning

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The clarification invites families to reassess existing governance and legal ownership arrangements: for example, foundations and trust vehicles established before the tax regime may need to ensure they meet Article 17 conditions or restructure accordingly. Succession plans that rely on holding entities should map the tax and cash-flow implications of transparency vs entity-level taxation.

Cross-border and residency considerations

Vehicles owned by non-residents or with foreign-based beneficiaries should carefully consider the effective-management and control test, treaty access issues and whether investment income is characterised as “personal investment” or business income — all significant determinants of tax treatment under the clarification.

Strategic positioning of the UAE as a wealth hub

For global investors, the clarification enhances the UAE’s appeal as a stable, transparent jurisdiction for family-wealth structures. By offering clear pathways to tax neutrality (or preferential tax regimes), the UAE reinforces its status as a competitive locale, so long as governance, substance and regulatory oversight are aligned.

Conclusion

The FTA’s clarification marks a major milestone in the UAE’s tax-governance framework for family-wealth structures. By bringing clarity to an area that had been ambiguous, it allows foundations, family offices and advisers to move from uncertainty to planned governance and compliance.

The time has come for wealth-structuring participants to review, document, and (if necessary) restructure, ensuring that their vehicles align with the guidance rather than react under pressure post-fact.

In doing so, families and advisers can preserve tax-efficiency, governance robustness and the UAE’s attractiveness as a wealth-management hub, not just for today, but across generations.

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