Tax-Free Individual Investments in Treasury Sukuk with Biannual Profit Distributions

The UAE Ministry of Finance has launched "Individual Sukuk," the country's first government investment program that lets regular people invest in high-quality assets previously available only to big institutional investors. The Islamic treasury bonds come with tax-free returns and require a minimum investment of just 4,000 dirhams per unit.

Here's how the program works: Individual investors pay no taxes on their returns from these Islamic treasury sukuk. Both the principal and profits are completely tax-exempt under current UAE laws. The government will distribute profits twice a year, with each investor receiving returns based on their ownership percentage and how long they held the investment.

The sukuk come with different maturity periods. Right now, the Ministry issues new sukuk with terms between two and five years, though they might extend this range later. Some instruments currently available on the platforms have shorter terms, including less than one year, depending on what's available when you invest.

Getting started is straightforward. Investors can open accounts digitally through participating banks' online platforms. Each bank sets its own terms and conditions, plus limits on how many units or total investment amount you can make per transaction.

The government worked with banks to create a special fee structure to encourage more people to participate. You'll pay about 0.25% for each buy transaction and the same for each sell transaction. There's also an annual management fee of up to 0.30% calculated monthly or quarterly on your total portfolio value.

But there's one restriction: you can't transfer these fractional sukuk to other financial institutions or trading systems. They stay registered only within the participating banks' digital platforms.

These Islamic treasury sukuk are Sharia-compliant securities issued by the UAE federal government and sold in local markets using UAE dirhams. The individual sukuk are linked to government treasury sukuk already trading in the market for institutional investors. This means regular investors can now access the same high-quality, guaranteed assets that were previously limited to major investors.

The Ministry is rolling out the program through national banks across the country. For investors, this represents a new way to put money into government-backed securities without needing the large minimums that institutional products typically require. And with the tax-free status, the returns go directly to investors without any deductions.