Investment Funds in the UAE: Structure and Licensing
In-depth exploration of UAE investment fund legal structures, licensing requirements, and compliance standards to ensure strategic adherence to 2025 regulations.
A practical overview of investment fund law in the UAE to help you set up compliant, licensed and properly structured fund entities.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
Investment Funds in the UAE: Legal Structures, Licensing and Compliance
The United Arab Emirates (UAE) is a dynamic global financial hub. For anyone setting up or managing investment funds in the UAE, understanding the available legal structures, the licensing route and the compliance rules is crucial.
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This guide by Nour Attorneys reviews the latest regulations as of 2025. It covers legal structures, licensing procedures and the main compliance considerations, to help investors and fund managers work through this complex environment.
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It sets out the different types of qualifying investment funds, the conditions they must meet for corporate tax exemption, and the wider regulatory landscape that affects how they are established and operated in the UAE.
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Legal Structures for Investment Funds in the UAE
This section explains the main fund structures recognised for UAE corporate tax purposes and the conditions each must meet.
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The UAE's regulatory framework for investment funds is designed to foster a competitive and transparent environment. A cornerstone of this framework is Cabinet Decision No. 34 of 2025. It sets out the conditions for Qualifying Investment Funds (QIFs) and Qualifying Limited Partnerships (QLPs) for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
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Qualifying Investment Funds (QIFs)
A Qualifying Investment Fund (QIF) issues investment interests to raise capital or pool funds for profit from investments. To be exempt from corporate tax (excluding REITs), a QIF must meet specific criteria:
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- Primary business activities: The fund's principal business activities must be investment-related. Any other activities must be ancillary or incidental to the investment business, and their combined revenue must not exceed 5% of the fund's total revenue in the relevant financial year.
- Investor control: Investors must not have control over the day-to-day management of the investment fund.
- Information provision: The fund must provide its investors with all necessary information, documents and data for calculating their Taxable Income.
Real Estate Investment Trusts (REITs)
REITs have specific corporate tax exemption conditions under Cabinet Decision No. 34 of 2025:
- Immovable property value: The value of immovable property (excluding land) managed or owned by the REIT, and by any exempt person wholly owned and controlled by the REIT, must exceed AED 100,000,000.
- Public flotation or institutional ownership: At least 20% of its shares must be floated on a Recognised Stock Exchange, or it must be directly wholly owned by two or more institutional investors who are not related parties.
- Rental income-generating property: The REIT, including any wholly owned and controlled exempt person, must hold rental income-generating immovable property (excluding property held solely for capital appreciation) with an average value of at least 70% of its total assets during the relevant financial year.
Qualifying Limited Partnerships (QLPs)
A QLP can apply for corporate tax exemption if:
- Investment business: Its principal business activities are investment-related, and any other activities are ancillary or incidental.
- No immovable property income: It does not derive income from immovable property located in the UAE.
- No tax avoidance: The main or principal purpose of the QLP is not to avoid corporate tax.
Each of these structures offers a different route for investment, with its own rules designed to ensure compliance and support economic growth in the UAE. For detailed guidance on establishing and managing these structures, it is advisable to consult corporate law specialists. Contact Nour Attorneys for corporate law advice.
Licensing Requirements for Investment Funds in the UAE
Operating an investment fund in the UAE involves a multi-layered licensing framework. The regulator depends on where the fund is domiciled: mainland UAE, the DIFC or the ADGM.
Securities and Commodities Authority (SCA)
In mainland UAE, the Securities and Commodities Authority (SCA) regulates the capital markets and licenses investment fund activities, with the aim of protecting investors and maintaining market integrity.
Dubai Financial Services Authority (DFSA)
The Dubai International Financial Centre (DIFC) is regulated by the Dubai Financial Services Authority (DFSA), which governs all financial services within the DIFC, including various types of investment fund. DFSA-licensed fund managers must comply with its comprehensive rulebook.
Financial Services Regulatory Authority (FSRA)
In the Abu Dhabi Global Market (ADGM), the Financial Services Regulatory Authority (FSRA) authorises and supervises financial services. Its framework attracts a wide range of fund structures, which require FSRA licences and must follow its regulations.
Nour Attorneys provides specialised guidance on securing licences and staying compliant. Learn more about our financial regulatory compliance services.
Compliance Framework and Key Regulations
A sound compliance framework is essential for investment funds in the UAE. Funds are governed by federal laws, by the regulations of authorities such as the SCA, DFSA and FSRA, and by international frameworks.
Key considerations include AML/CTF, corporate governance and reporting. Cabinet Decision No. 34 of 2025 is central, as it sets out the corporate tax exemption conditions for QIFs, REITs and QLPs. Continuous monitoring is vital to maintain tax-exempt status and avoid penalties.
Corporate Tax Exemptions for Investment Funds
The following table summarises the key conditions for corporate tax exemption under Cabinet Decision No. 34 of 2025 for each type of investment fund:
| Fund type | Key conditions for corporate tax exemption |
|---|---|
| Qualifying Investment Fund (QIF) | Principal business is investment-related. Ancillary activities revenue does not exceed 5% of total revenue. Investors do not have day-to-day management control. Provides investors with necessary tax information. |
| Real Estate Investment Trust (REIT) | Immovable property value exceeds AED 100,000,000. At least 20% of shares floated on a Recognised Stock Exchange or owned by two or more institutional investors. Average value of rental income-generating property is at least 70% of total assets. |
| Qualifying Limited Partnership (QLP) | Principal business is investment-related. No income from UAE immovable property. Not established for tax avoidance purposes. |
Conclusion
The UAE's investment fund landscape is dynamic and well regulated, and it offers a range of legal structures. Fund managers must meet strict licensing and compliance requirements, whether they operate under the SCA in mainland UAE or in the DIFC or ADGM.
Cabinet Decision No. 34 of 2025 clarifies the corporate tax exemptions for QIFs, REITs and QLPs. Working through this environment successfully requires experienced legal guidance. Nour Attorneys provides comprehensive legal services to help you establish and manage your investment fund in the UAE.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.
Nour Attorneys Team
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