How are qualifying investment funds treated for Corporate Tax?

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.

Article 10 – Qualifying Investment Fund 1. An investment fund may apply to the Authority to be exempt from Corporate Tax as a Qualifying Investment Fund where all of the following conditions are met: a. The investment fund or the investment fund’s manager is subject to the regulatory oversight of a competent authority in the State, or a foreign competent authority recognised for the purposes of this Article. b. Interests in the investment fund are traded on a Recognised Stock Exchange, or are marketed and made available sufficiently widely to investors. c. The main or principal purpose of the investment fund is not to avoid Corporate Tax. d. Any other conditions as may be prescribed in a decision issued by Cabinet at the suggestion of the Minister. 2. For the purposes of monitoring the continued compliance by a Qualifying Investment Fund with the conditions of Clause 1 of this Article, the Authority may request any relevant information or records within the timeline prescribed by the Authority. Chapter Four – Taxable Person and Corporate Tax Base

However, if the natural person holds the ownership interest as a Personal Investment, the net income of the Qualifying Investment Fund will not be treated as Taxable Income of the natural person.26 Example 1: A natural person investing in a Qualifying Investment Fund A natural person based in the UAE invests (using personal savings) in a Qualifying Investment Fund where he earns income from his investment. He does not require a Licence to make such an investment. The income derived by the natural person is Personal Investment income and accordingly is not subject to Corporate Tax. Non-Resident Persons For a Non-Resident Person that holds an ownership interest in a Qualifying Investment Fund, any net income that is not Exempt Income will be taken into account for Corporate Tax purposes if it is attributable to a Permanent Establishment of the NonResident Person in the UAE. An investor that is a Non-Resident Person and a juridical person that holds an ownership interest in a Qualifying Investment Fund which earns income from Immovable Property in the UAE, is earning income from that Immovable Property and, therefore, has a nexus in the UAE, as specified in Cabinet Decision No. 56 of 2023.27 The proportional part of net income from Immovable Property in the UAE shall be treated as Taxable Income of that investor. A Non-Resident Person that holds an ownership interest in a Qualifying Investment Fund may derive State Sourced Income, however, the current Withholding Tax rate on State Sourced Income is 0%.28 Exempt Persons If an Exempt Person holds an ownership interest in a Qualifying Investment Fund, it will not be subject to Corporate Tax on the net income from the Qualifying Investment Fund. However, if an Exempt Person is treated as a Taxable Person in relation to certain Business or Business Activities under Article 4(2) of the Corporate Tax Law, such an Exempt Person shall treat any net income from a Qualifying Investment Fund (that is not Exempt Income) as Taxable Income only to the extent that it holds an 26 Article 2 of Cabinet Decision No. 49 of 2023. 27 Article 2 of Cabinet Decision No. 56 of 2023. 28 Article 12(3)(b) of the Corporate Tax Law. Corporate Tax Guide | Investment Funds and Investment Managers | CTGIFM1 22

Article 6 – Unincorporated Partnership 1. An Unincorporated Partnership that is treated as a Taxable Person in its own right in accordance with Clause (8) of Article (16) of the Corporate Tax Law shall be considered an entity under the definition of a Qualifying Investment Fund. 2. An Unincorporated Partnership may apply to the Authority to be exempt from Corporate Tax as a Qualifying Investment Fund, provided that all the relevant conditions specified in the Corporate Tax Law and this Decision are met.