Starting 1 July 2025, the Federal Tax Authority has introduced a new option that changes the game as unincorporated partnerships can now choose to be treated as a standalone taxable entity, bringing clarity, flexibility, and a simpler filing process under UAE tax services. In this blog, our team at SSCOGLOBAL., one of the best accounting firms in Dubai, breaks down exactly what this means and how our UAE tax services can make the whole process a breeze.
Why was change needed?
Rather than being its own legal body, an unincorporated partnership is simply the mechanism by which partners allocate profits and cover losses. Under Federal Decree-Law No. 47 of 2022 (the “Corporate Tax Law”), they were not treated as taxable persons; instead, each partner declared their share of income on their own corporate-tax return. That approach worked, but it could get messy as partners needed clear rules on registration, distributive shares, deadlines for declarations, and more.
Ministerial Decision No. 261 of 2024 laid the groundwork, but it was Decision No. 5 of 2025, effective 1 July, that set out the definitive rules. It covers everything from who registers and how, to when you can ask your partnership to be taxed as if it were a standalone entity.
Meet the New Registration Process
If your unincorporated partnership didn’t have its first financial year end before 1 July 2025, you’ve got three months after the end of that first year to register for corporate tax. If your first year ended before 1 July, you must register no later than 31 August 2025.
Your partnership has to appoint one partner as the “authorized partner.” This person becomes the main point of contact for all corporate tax matters. They fill in the FTA’s registration form, score your Tax Registration Number (TRN), and handle communications.
Annual Declarations (Clarity & Deadlines)
Once you’re registered, it’s time for the annual declaration. You’ve got nine months from your partnership’s financial year end to file. That declaration bundles everything, that partnership’s assets, liabilities, revenues, expenses, and breaks down each partner’s share, so they know exactly what to report on their own returns.
For years ending on or before 31 March 2025, the FTA gave a grace period i.e. declarations for those older years can be filed at any time before 31 December 2025.
Distributive shares made simple
Sometimes partnership agreements spell out exactly how profits get split. But if yours doesn’t, or you’re missing the paperwork, the FTA says it is feasible to assume an equal split. It’s a straightforward fallback, if you have three partners and can’t show otherwise, you each get a third of the taxable income.
The optional election to become a “Taxable Person”
Here’s the most interesting bit, for the first time, unincorporated partnerships can choose to be treated as a Taxable Person in their own right. Why might you want that?
- Simplified partner reporting. Instead of each partner filing their own slice of a partnership return, the partnership itself files one corporate-tax return and pays any liability up front. Partners then claim their share of profits on their financial statements, but the main compliance burden sits with the partnership.
- Alignment with international norms. If you deal with foreign investors or global banks, they often prefer seeing a clear, single-entity tax profile rather than a distributed one.
- Potential cash flow advantage. Depending on your partners’ own tax situation, pre-paying corporate tax at the partnership level can smooth out obligations and avoid surprises at year-end.
How to elect?
- Submit your application before the end of the relevant financial year.
- In the application, state whether the election should take effect immediately or at the start of your next tax period.
- If you apply on or before 31 December 2025, you can ask for the election to cover any tax period ending on or before that date, which is handy if you want to align your books retrospectively.
Once approved, your partnership becomes a corporate tax “person” from the date you choose. You’ll file returns and settle any tax due by the deadlines outlined in Decision No. 5, 31 December 2025 for periods ending on or before 31 March 2025, with future periods following the standard 9-month filing and payment window.
Deregistration, When It’s Time to Wrap Up
If your partnership dissolves or stops trading, don’t forget to de-register. The authorized partner has three months from the cessation of filing for deregistration
Putting it all together
Is the new option right for you?
The FTA’s new rules give unincorporated partnerships clarity and choice. You get clear deadlines, straightforward rules on sharing income, and, crucially, the ability to opt into a single-entity tax regime. But is it the right move?
- Small family partnerships might stick with the traditional approach to keeping things simple.
- Growing professional services firms, consultancies, legal practices, finance shops, may find the single-entity route smoother, especially if they bring corporate investors.
- Cross-border operations will appreciate having one clear TRN and return to share with overseas stakeholders.
As one of the top accounting firms in Dubai, we’ve guided countless unincorporated partnerships through UAE corporate tax. Our UAE tax services cover:
- Registration and TRN: We’ll appoint and coach your authorized partner, fill in the forms, chase the FTA, and secure your Tax Registration Number.
- Election advisory: We’ll run the cash-flow models, forecast scenarios and advise whether and when to elect a Taxable Person.
- Return preparation: Nine months can fly by. We’ll gather your financial statements, allocate distributive shares, prepare the annual declaration, and file it on time.
- Deregistration support: Wrapping up? We’ll ensure your deregistration goes smoothly, avoiding disruptions.
How do you get started?
- Drop us a line at SS & Co. Global, for UAE tax services, whether you’re curious about deadlines, need a preliminary review of your partnership agreement, or want a deep dive into election scenarios. We’ll map your partnership’s financial year, flag deadlines, and sketch out the options that fit your growth plans.
Wrapping up
The FTA’s Decision No. 5 of 2025 gives unincorporated partnerships fresh clarity, and a brand-new tax option, to align with today’s business landscape. If you’ve been on the fence about corporate tax registration, or if you’re weighing the benefits of becoming a Taxable Person in your own right, now’s the time to act.
SS & Co.’s UAE tax services are built for partnerships like yours. Let’s tackle your registration, election, and compliance together so you can focus on running your business.
Ready to explore your options? Get in touch with SS & Co. Global today and turn this new UAE tax option into a growth advantage.
