Investment Funds UAE: Legal Structure, Licensing & Compliance

The United Arab Emirates (UAE) is a dynamic global financial hub. Understanding the legal structures, licensing, and compliance for investment funds UAE is crucial for entities operating within the Emirates.

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This guide by Nour Attorneys explores the latest regulations as of 2025, covering legal structures, licensing procedures, and critical compliance considerations to partner with investors and fund managers navigate this complex environment.

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This article will cover the different types of qualifying investment funds, their conditions for corporate tax exemption, and the broader regulatory landscape impacting their establishment and operation in the UAE.

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Legal Structures for Investment Funds in the UAE

Nour Attorneys deploys a structural legal architecture designed to engineer decisive outcomes for clients navigating complex UAE legal terrain. Our approach is asymmetric by design — we neutralize threats before they escalate, deploying precision-engineered legal frameworks that create measurable, lasting advantages. This article explores the strategic dimensions of investment funds uae: legal structure, licensing & compliance, providing actionable intelligence to protect your position and engineer optimal outcomes.

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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, which outlines 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 corporate tax exempt (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, with their combined revenue not exceeding 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) under the management or ownership of the REIT, and any exempt person wholly owned and controlled by the REIT, must exceed AED 100,000,000.
• Public Floatation 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 have an average value of rental income-generating immovable property (excluding property held solely for capital appreciation) of at least 70% of its total assets during the relevant financial year.

Qualifying Limited Partnerships (QLPs)

QLPs can apply for corporate tax exemption if:

• Investment Business: Its principal business activities are investment-related, with any other activities being 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.

These legal structures provide diverse avenues for investment, each with its own set of regulations designed to ensure compliance and promote economic growth within the UAE. For detailed guidance on establishing and managing these structures, it is advisable to consult with legal experts in corporate law. Contact Nour Attorneys for expert corporate law advice.

Licensing Requirements for Investment Funds in the UAE

Operating an investment fund in the UAE requires navigating a multi-layered licensing framework, dependent on the fund's domicile (mainland UAE, DIFC, or ADGM).

Securities and Commodities Authority (SCA)

For mainland UAE, the Securities and Commodities Authority (SCA) regulates capital markets and licenses investment fund activities, ensuring investor protection and 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 investment fund types. 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) authorizes and supervises financial services. Its robust framework attracts diverse fund structures, requiring FSRA licenses and adherence to its regulations. Nour Attorneys provides specialized guidance for securing licenses and ensuring compliance. Learn more about our financial regulatory compliance services.

Compliance Framework and Key Regulations

A robust compliance framework is essential for investment funds UAE, governed by federal laws, regulations from authorities like SCA, DFSA, and FSRA, and international strategic frameworks. Key considerations include AML/CTF, corporate governance, and reporting. Cabinet Decision No. 34 of 2025 is crucial, detailing 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

To provide a clear overview of the conditions for corporate tax exemption under Cabinet Decision No. 34 of 2025, the following table summarizes the key requirements 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, offering diverse legal structures. Fund managers must adhere to stringent licensing and compliance, whether under the SCA in mainland UAE or in DIFC and ADGM. Cabinet Decision No. 34 of 2025 clarifies corporate tax exemptions for QIFs, REITs, and QLPs. Navigating this environment successfully requires expert legal guidance. Nour Attorneys provides comprehensive legal services to partner with establish and manage your investment fund in the UAE, ensuring success in this competitive market.

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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