On October 28, the Minister issued Decision No. 261, introducing pivotal updates under Article 5(2). This decision expands the scope of entities eligible for tax transparency, allowing ๐ฎ๐ป๐ ๐ท๐๐ฟ๐ถ๐ฑ๐ถ๐ฐ๐ฎ๐น ๐ฝ๐ฒ๐ฟ๐๐ผ๐ป ๐๐ต๐ผ๐น๐น๐ ๐ผ๐๐ป๐ฒ๐ฑ ๐ฎ๐ป๐ฑ ๐ฐ๐ผ๐ป๐๐ฟ๐ผ๐น๐น๐ฒ๐ฑ ๐ฏ๐ ๐ฎ ๐๐ฎ๐บ๐ถ๐น๐ ๐๐ผ๐๐ป๐ฑ๐ฎ๐๐ถ๐ผ๐ป (whether directly or indirectly through an uninterrupted chain of Unincorporated Partnerships) to apply for transparent status.
What’s New?
Previously, entities established by Family Foundations to manage investments were ineligible for transparency. Being opaque, these entities faced the 9% Corporate Tax rate, even though certain income streams, like shares, could qualify for exemptions under the Participation Exemption.
The slide illustrates these changes:
Green Entities ัould technically benefit from a 0% rate but faced nearly impossible compliance burdens.
Red Entities remain outside the 0% rate scope. Real estate income often doesnโt qualify, and income from investments in artwork, jewelry, or antiques is excluded.
Under the earlier rules, foundations often had to hold assets by itself to avoid tax leakage. The new decision allows both eligible and ineligible entities to apply for tax transparency, offering relief from compliance challenges tied to zero-rating. Even entities eligible for the 0% rate can benefit from reduced compliance burdens with transparency status.
Wealth menagers play a critical role in this structure. Why? To qualify, an entity must not engage in activities that would constitute Business if performed directly by the founder, settlor, or beneficiaries. Our earlier research suggests that active investment management can be treated as a Business for listed individuals. Strategically outsourcing such functions helps mitigate risks.
Explore the opportunities these changes bring to optimize your family wealth structures.
