Update on Taxation of Partnerships

5 May 2025 – Following the issuance of Ministerial Decision 261 of 2024 by the United Arab Emirates (UAE) Ministry of Finance (MoF), the Federal Tax Authority (FTA) is in the process of updating the tax guide on partnerships, which is expected to be released soon. This anticipated guide is expected to provide clearer details on several key aspects, including the conditions for unincorporated partnerships, the registration process for foreign partnerships, and additional compliance requirements.

In parallel, the FTA has enhanced its tax portal by introducing "unincorporated partnership" as a recognized legal status within the system. This update allows unincorporated partnerships to submit their Corporate Tax (CT) registration applications directly through the portal. However, this functionality is limited to UAE-established unincorporated partnerships, and foreign partnerships will need to wait for future updates before they can access this feature.

Separately, the MoF and the FTA have announced, through their media channels, an initiative to waive administrative penalties for certain taxable persons who failed to submit their CT registration applications to the FTA within the required timeframe. To benefit from this waiver, the taxable person must file their tax return or annual declaration within 7 months after the end of their first tax period, instead of the usual 9-month deadline as per the CT Law. A formal Cabinet decision outlining the details of this initiative has not yet been published on their website.