UAE Sets New Corporate Tax Rules for Non-Resident Person’s Nexus
The UAE Ministry of Finance has issued Cabinet Decision No. 35 of 2025, redefining when a non-resident juridical investor is considered to have a taxable presence (nexus) in the UAE. This update replaces the earlier Cabinet Decision No. 56 of 2023 and aims to streamline compliance and enhance the UAE’s investment appeal.
The decision applies to non-resident investors in Qualifying Investment Funds (QIFs) and Real Estate Investment Trusts (REITs), and aligns with the latest Cabinet Decision No. 34 of 2025 under the Federal Decree-Law No. 47 of 2022 on corporate taxation.
Key Updates:
- For QIF Investors: A nexus is created if:
- The fund breaches the real estate threshold and fails to distribute at least 80% of its income within 9 months after its financial year-end.
- The investor acquires ownership before distribution or the fund fails to meet ownership diversity requirements during the tax period.
- For REIT Investors: A nexus arises on:
- The date of dividend distribution if 80%+ income is distributed within 9 months, or
- The date of acquiring ownership if the distribution threshold isn’t met.
Exemption:
Non-resident juridical investors exclusively investing in QIFs and/or REITs that meet the above criteria will not be considered to have a taxable presence in the UAE.
This move simplifies tax obligations for foreign investors and reaffirms the UAE’s commitment to fostering a business-friendly and transparent investment environment.
