The Qualifying Limited Partnership

The QLP is a vehicle with a gate

Cabinet Decision No. 34 of 2025 defines a Qualifying Limited Partnership as a juridical person formed under the relevant legislation for the sole purpose of collective investment. The legal framework must have allowed that kind of partnership on or before 1 June 2023, or be one later prescribed by the Minister. The label alone does not settle the tax result.

A QLP can apply to the Federal Tax Authority for exemption from Corporate Tax. Article 5 of the decision requires its principal activity to be Investment Business, its other activity to stay ancillary or incidental, its principal purpose not to be Corporate Tax avoidance, and no income from UAE immovable property. These conditions describe the vehicle's activity, not just its registration form.

If you are choosing a QLP, start with the partnership agreement, governing legislation, investment policy and manager appointment. Those objects must show collective investment in practice. A document that permits property letting or an unrelated operating trade creates a question before it creates a tax answer.

• Juridical partnership for collective investment.
• Eligible legal framework must be identified.
• Application is made to the FTA.
• The agreement must match the activity.

Use the QLP for pooled investment activity

The QLP makes sense where investors commit capital to a defined investment policy and the partnership carries out that policy through an investment manager. The decision is built around collective investment. It is not a general-purpose company wrapper for a trading business that happens to have several owners. The private-equity or venture-fund facts should be visible in the subscription documents and portfolio records.

The hard exclusion is UAE immovable-property income. Article 5 says the QLP must not derive income from a right in rem, sale, disposal, assignment, direct use, letting or other exploitation of UAE immovable property. If the proposed fund needs rental income, stop at the design stage and compare a vehicle whose rules expressly address property, rather than forcing the QLP to carry the wrong activity.

The decision also permits wholly owned entities of an exempt QLP to apply for exemption when they hold assets, invest funds for the QLP or carry out its ancillary activities, while meeting the same property-income restriction. That means a special-purpose vehicle needs its own activity map. Draw the ownership chart and the cash flows before deciding that every subsidiary follows the partnership.

• Defined strategy and investment policy.
• Partnership agreement and subscription terms.
• No UAE property income in the QLP.
• Subsidiary activity mapped separately.

Look through the accounts, not the slogan

For a taxable juridical person investing in an exempt QLP, Article 5 of Cabinet Decision No. 34 of 2025 requires a prorated share of the partnership's net income to be included, based on the investor's ownership interest and the financial statements, after the stated manager adjustment. The same article excludes profit distributions from taxable income. The result is a calculation that follows the partnership records.

Worked illustration: the QLP financial statements show AED 3,600,000 of net income and a corporate partner owns 25% of the ownership interest. Its prorated amount is AED 3,600,000 x 25% = AED 900,000, before other adjustments. These amounts illustrate the method, not a statutory threshold. The signed accounts and ownership register are what make the number defensible.

We would document the look-through calculation for every tax period, because Article 5(6) ties the partner's inclusion to the financial statements and ownership interest. Calling the structure transparent is not enough. The workpaper should reconcile the partner percentage to the register, the net income to the accounts and any manager amount to the agreement.

• Start with signed financial statements.
• Apply the ownership interest for the period.
• Separate manager income as required.
• Keep distributions distinct from net income.

Build the application around named evidence

The first file is the legal identity of the partnership: certificate, governing legislation and partnership agreement. Add the investment policy, offering or subscription terms, manager agreement, ownership register and bank-flow map. The purpose is to show that the QLP exists for collective investment and that the money moving through it matches that purpose.

Then test the restrictions. Reconcile the general ledger to the signed financial statements, scan revenue for property income, list every wholly owned entity and classify its activity, and record why the principal purpose is investment rather than tax avoidance. The 5% ancillary-revenue threshold in Article 5(4) is measured against total QLP revenue for the relevant financial year, so the ledger must show the denominator.

If the evidence is ready, the QLP can submit its exemption application to the FTA with a condition matrix behind it. If a condition is missed, the decision says the partnership ceases to be an exempt person from the relevant tax period and for the subsequent 4 tax periods. That is a reason to fix the activity map before filing.

• Confirm the governing legal framework.
• Reconcile revenue to signed accounts.
• Screen the QLP and subsidiaries for property income.
• Record the purpose and ownership evidence.

The tax answer ends where the legal form begins

Cabinet Decision No. 34 of 2025 gives a route for a QLP to apply for exemption and sets the conditions for its income and wholly owned entities. It does not specify how every foreign partnership statute maps to the definition of a juridical person formed for collective investment. That is the boundary of the evidence. The governing law and constitution need to be checked for the actual vehicle.

The useful deliverable is a QLP condition memo, an ownership and subsidiary chart, a property-income screen, a revenue test and a partner allocation workpaper. It should state which document supports each conclusion. A short missing schedule is easier to correct than a vague conclusion that the partnership is transparent.

This review covers tax classification and compliance preparation. It does not incorporate the partnership, approve a fund licence, provide a legal opinion on partner rights or perform a statutory audit. If you are at the decision point, send the partnership agreement and latest signed accounts first. They will show whether the proposed route fits the business.