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UAE Ministerial Decision No. 115 of 2023 on Private Pension Funds and Private Social Security Funds
UAE Ministerial Decision No. 115 of 2023 on Private Pension Funds and Private Social Security Funds
The Ministry of Finance (MoF) has issued a Ministerial Decision No. 115 of 2023 on the Private Pension Funds and Private Social Security Funds for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (“CT Law”).
Key Highlights of the Decision:
Private Pension Funds
The decision explains the conditions under which a private pension funds can apply for exemption from Corporate Taxes (“CT”). The exemption can be claimed on fulfilment of all the conditions:
- The fund consists of pool of assets assigned by law, or acquired by financing using Pension Plan contributions, or by contract as Pension Plan Assets.
- The fund must give the plan members or beneficiaries the right to claims against the Funds’ assets or earnings.
Private Social Security Funds
The decision clarifies that the private social security funds can apply for exemption from CT, provided the fund consists of pool of assets assigned by law, or acquired by financing using contributions from members.
Permissible Sources of Income
With regard to income of funds, the ministry provides that the funds must earn its income from the following permissible sources only:
- Investments or deposits held for the fulfilling the obligations of fund.
- Underwriting commissions.
- Rebates of charges paid by the fund to persons in charge of managing the assets of the funds.
- Other income derived from the investments made for the benefit of members or beneficiaries.
Rules to deduct contributions from the Fund
The employer can deduct the contributions to the private pension funds in respect of its employees, up to a maximum of 15% of total deductible remuneration paid in a tax period.
Administrative rules for approval and withdrawal of exemptions
For the administration of funds, both the funds must have an auditor. The auditor of the funds must ensure compliance with the conditions of the decision annually.
Additionally, the auditor must report the breach of the conditions in the Annual report of the funds and to the authorities as well.
Further, the authorities reserve the right to withdraw the exemption in case of non-compliance with the conditions.
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