The UAE’s Federal Tax Authority has in June 2026, released an updated Corporate Tax Guide on the Taxation of Family Foundations, building on the original version it put out in May 2025. Although the law has remained unchanged however the guidance on how that law applies to the kind of structures families actually use has become meaningfully clearer.
A Family Foundation is not automatically exempt from UAE Corporate Tax. By default, it is treated as a taxable entity in its own right. Most families aim for fiscal transparency which is a favourable position and where the foundation itself is not taxed separately. Instead, income and assets are treated as flowing directly to the beneficiaries based on their respective shares. Achieving that requires a formal application to the FTA and meeting a specific set of conditions. The June 2026 update clarifies how those rules play out in practice, particularly for families whose structures are more complex than a single foundation holding a handful of assets.
Two Foundations, One SPV: A Common Problem Now Resolved
Large families often split their wealth across multiple foundations where one foundation may be created for each family branch. When those foundations jointly own a holding company or SPV, the question of whether the “wholly owned” condition for transparency is still satisfied had been genuinely unclear. The updated guide answers it directly: yes, a company jointly owned by two qualifying Family Foundations can still meet the ownership condition, provided both foundations have themselves been approved for transparent treatment. This resolves a structuring concern that many advisers and families had been sitting with for some time.
Where LLCs Stand
Limited liability companies are everywhere in UAE private wealth structures, so the guide’s treatment of them matters. An LLC cannot apply directly to the FTA for transparent status as a Family Foundation, it simply does not fit the legal definition. However, an LLC can still benefit from transparency indirectly, if it is wholly owned and controlled by a qualifying Family Foundation. The foundation comes first; the LLC’s position follows from that.
Conclusion
The June 2026 update is not a cause for alarm, but it is a prompt to take stock. If your family’s structure involves jointly owned holding companies, LLCs sitting beneath a foundation, or a free zone family foundations, it is worth reviewing how those arrangements hold up against the refined guidance. Structures designed under the original May 2025 guide may still work perfectly well, but it is strongly suggested to have them analysed as per the new guide.
“This article is for information purposes only and does not constitute legal or professional advice”.
For more information, you may contact:
Thomas Paoletti
Fauzia Khan
