In the United Arab Emirates (UAE), family foundations are generally considered separate legal entities and, by default, fall under the scope of the UAE Corporate Tax (CT) regime. However, they have the option to apply for treatment as "Unincorporated Partnerships," which can exempt them from corporate tax, provided certain conditions are met. 

Conditions for Tax-Transparent Treatment:

To qualify for tax-transparent status, a family foundation must satisfy the following criteria:

Beneficiaries: Established for the benefit of identified or identifiable natural persons, public benefit entities, or both.

Primary Activity: Engages primarily in receiving, holding, investing, disbursing, or managing assets or funds associated with savings or investment.

Business Activities: Does not conduct any activity that would be considered a business or business activity under the UAE CT Law if undertaken directly by its founder, settlor, or beneficiaries.

Tax Avoidance: The main purpose is not the avoidance of corporate tax.

Additional Conditions: Complies with any other conditions prescribed by the Minister.

If these conditions are met, the family foundation can apply to the Federal Tax Authority (FTA) to be treated as an unincorporated partnership. This treatment allows the foundation's income to be taxed directly at the beneficiary level, rather than at the foundation level.

Registration Requirements:

Even if a family foundation qualifies for tax-transparent treatment, it is advisable to register with the FTA to formalize its tax status and ensure compliance with UAE tax regulations. This registration process involves submitting an application to the FTA, demonstrating that the foundation meets all the necessary conditions for tax-transparent treatment. 

Conclusion:

While family foundations in the UAE are generally subject to corporate tax, they can apply for tax-transparent treatment as unincorporated partnerships if they meet specific conditions. To ensure compliance and formalize their tax status, such foundations should register with the FTA.