Incorporated partnershipsAnd Corporate Tax
A partnership is normally an arrangement, relationship or contract between two or more Persons to carry on Business together, and to share the profits and losses of that Business.
In the UAE context, a partnership incorporated partnership has a separate legal personality distinct from its partners.
The legal status of an incorporated partnership will be informed by the relevant legislation in the UAE. The relevant legislation includes the Federal, Emirate and Free Zone legislation and regulations.
Based on the relevant legislation, the following is an illustrative list of entities considered as incorporated partnerships and,
therefore, treated as juridical persons under the Corporate Tax law.
a) Joint Liability Company.
b) Limited Partnership Company.
c) Civil Company.
d) General Partnership: (DIFC)
e) Limited Liability Partnership: (DIFC)
f) Limited Partnership: (DIFC)
On the basis that they are juridical persons, the Corporate Tax treatment of incorporated partnerships is aligned with the tax treatment of other juridical persons such as Limited Liability Companies (LLCs). The partners in these partnerships are not directly taxed on the Business conducted by the partnership, as this is taxed at the level of the incorporated partnership. The partners will generally receive a share in profits that will not be subject to Corporate Tax as the partnership is treated as a Resident Person in the UAE, and the Corporate Tax Law exempts Dividends and other profit distributions from a juridical person that is a Resident Person.
Understanding these structures can be crucial for strategic business planning and compliance in the UAE’s dynamic regulatory environment.
