Are pension funds exempt from Corporate Tax?

Article 2 – Private Pension Fund A private pension fund may apply to the Authority to be exempt from Corporate Tax under paragraph (g) of Clause 1 and Clause 3 of Article 4 of the Corporate Tax Law where all of the following conditions are met: 1. The fund comprises a pool of assets which have been assigned by law or contract as Pension Plan assets or the acquisition of these assets has been financed by or with the use of contributions to a Pension Plan for the exclusive purpose of financing the Pension Plan benefits. 2. The fund grants Pension Plan Members or Beneficiaries a right or other contractual claim or entitlement, against its assets or earnings. 3. The income of the fund solely comprises income as specified in Article 4 of this Decision. 4. The fund must have an Auditor. Ministerial Decision No. 115 of 2023 – As published by Ministry of Finance 2

Article 4 – Exempt Person 1. The following Persons shall be exempt from Corporate Tax: a. A Government Entity. b. A Government Controlled Entity. c. A Person engaged in an Extractive Business, that meets the conditions of Article 7 of this Decree-Law. d. A Person engaged in a Non-Extractive Natural Resource Business, that meets the conditions of Article 8 of this Decree-Law. e. A Qualifying Public Benefit Entity under Article 9 of this Decree-Law. f. A Qualifying Investment Fund under Article 10 of this Decree-Law. g. A public pension or social security fund, or a private pension or social security fund that is subject to regulatory oversight of the competent authority in the State and that meets any other conditions that may be prescribed by the Minister. h. A juridical person incorporated in the State that is wholly owned and controlled by an Exempt Person specified in paragraphs (a), (b), (f) and (g) of Clause 1 of this Article and conducts any of the following: 1) Undertakes part or whole of the activity of the Exempt Person. 2) Is engaged exclusively in holding assets or investing funds for the benefit of the Exempt Person. 3) Only carries out activities that are ancillary to those carried out by the 3 Clause added as per Federal Decree-Law No. 60 of 2023, and shall come into effect as of the date specified in a decision issued by the Cabinet at the suggestion of the Minister. Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 9 Exempt Person. i. Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister. 2. A Person under paragraphs (a), (b), (c) and (d) of Clause 1 of this Article that is a Taxable Person insofar as it relates to any Business or Business Activity under Articles 5, 6, 7 or 8 of this Decree-Law, respectively, shall be treated as an Exempt Person for the purposes of Articles 26, 27, 38 and 40 of this Decree-Law. 3. Persons specified in paragraphs (f), (g), (h) and (i) of Clause 1 of this Article, as applicable, are required to apply to the Authority to be exempt from Corporate Tax in the form and manner and within the timeline prescribed by the Authority in this regard. 4. The exemption from Corporate Tax under paragraphs (f), (g), (h) and (i) of Clause 1 of this Article, as applicable, shall be effective from the beginning of the Tax Period specified in the application, or any other date determined by the Authority. 5. In the event that the Exempt Person failed to meet any of the conditions under the relevant provisions of this Decree-Law at any particular time during a Tax Period, such Person shall cease to be an Exempt Person for the purposes of this Decree-Law from the beginning of that Tax Period. 6. For the purposes of Clause 5 of this Article, the Minister may prescribe the conditions under which a Person may continue to be an Exempt Person, or cease to be an Exempt Person from a different date, in any of the following instances: a. Failure to meet the conditions is the result of the liquidation or termination of the Person. b. Failure to meet the conditions is of a temporary nature and will be promptly rectified, and appropriate procedures are in place to monitor the compliance with the relevant conditions of this Decree-Law. c. Any other instances as may be prescribed by the Minister.

5. Public and private pension funds and social security funds 5.1. Public pension funds and social security funds Public pension funds and social security funds are typically initiated, sponsored and governed by a Federal or Local Government Entity. However, as the entitlement to receive the benefits from these funds and any surplus assets of the fund normally rests with the beneficiaries, they are not typically considered to be wholly owned and controlled by the Government Entity which oversees them. Recognising their importance to the society, public pension funds and social security funds can make an application to the FTA to be exempt from Corporate Tax. 16 Once approved, the exemption from Corporate Tax shall be effective from the beginning of the Tax Period specified in the application, or any other date determined by the FTA. 5.2. Private pension funds and social security funds 5.2.1. Purpose A private pension fund is a fund created to manage pension contributions and provide payments to retired natural persons above a defined retirement age. A private social security fund is a fund created by a private employer for the purposes of providing statutory end of service gratuity payments to employees. 5.2.2. Application requirements and process to be an Exempt Person The same Exempt Person status may be available to certain private pension funds or social security funds that meet the relevant conditions following an application to, and approval by, the FTA.17 To be eligible for exemption from Corporate Tax, private pension funds and social security funds need to be subject to regulatory oversight of a competent authority in the UAE, and must have a pool of assets that have been designated as "pension plan assets" or "fund assets" by law or a contract governing the establishment and 16 Article 4(1)(g) and Article 4(3) of the Corporate Tax Law. 17 Article 4(1)(g) and Article 4(3) of the Corporate Tax Law. Corporate Tax Guide | Public Benefit Entities, Pension Funds & Social Security Funds | CTGEPF1 17

Article 6 – Administration 1. The Auditor of a private pension fund or private social security fund shall confirm the compliance of the fund with the provisions of this Decision annually where the fund has made an application to the Authority under Clause 3 of Article 4 of the Corporate Tax Law to be exempt from Corporate Tax. 2. Where an exemption under paragraph (g) of Clause 1 of Article 4 of the Corporate Tax Law has been granted by the Authority, the Auditor shall report to the Authority any fact they have become aware of while carrying out the audit of accounting information contained in the annual report of a private pension fund or a private social security fund, where this fact constitutes a breach of the conditions specified in this Decision. 3. Subject to any other decisions issued by the Minister, the Authority shall have the right to withdraw the exemption provided for under paragraph (g) of Clause 1 of Article 4 of the Corporate Tax Law from a private pension fund or a private social security fund in any of the following circumstances: a. The Auditor has confirmed that the fund no longer meets the conditions specified in this Decision. b. The Auditor does not satisfy any of the conditions specified under Clauses 1 and 2 of this Article. c. The Authority finds that the fund no longer meets the conditions specified in this Decision.

A private pension fund may apply to the Authority to be exempt from Corporate Tax Law where all of the following conditions are met: 1. The fund comprises a pool of assets which have been assigned by law or contract as pension plan assets or the acquisition of these assets has been financed by or with the use of contributions to a pension plan for the exclusive purpose of financing the pension plan benefits. 2. The fund grants pension plan members or beneficiaries a right or other contractual claim or entitlement, against its assets or earnings. 3. The income of the fund solely comprises income as specified in the relevant decision. 4. The fund must have an Auditor.31 Example 9: A Pension Fund established in the UAE Company Y is a private pension fund established in Umm Al Quwain that meets the conditions to be exempt from Corporate Tax. The fund would like to make an application to the FTA to be treated as an Exempt Person. Company Y will be required to register for Corporate Tax as the fund will be considered a Taxable Person for Corporate Tax purposes until such time the application to be exempt for Corporate Tax is approved by the FTA. Once Company Y is registered for Corporate Tax, it can make an application to the FTA to be treated as an Exempt Person provided all the relevant conditions are met. Qualifying Investment Funds Whilst there are various structures that collective investment funds may take, the term investment fund refers to a contractual arrangement or juridical person whose primary purpose is to pool investor funds and invest such funds in accordance with a defined investment policy. Regardless of the type of investment fund, the Corporate Tax Law seeks to ensure the tax neutrality of investment funds so that investors, whether domestic or foreign, are in the same or a similar tax position as if they had invested directly in the underlying assets of the fund. In recognition of the neutrality principle, an investment fund can make an application to the FTA for exemption from Corporate Tax as a Qualifying Investment Fund where 31 Article 2 of Ministerial Decision No. 115 of 2023. Corporate Tax Guide I Registration of Resident Juridical Persons I CTGRJP1 22