UAE sets tax nexus rules for non-resident investors in real estate, funds
RIYADH: The UAE has issued new guidelines that clarify when foreigners and non-residents will be treated as having a taxable presence in the country when it comes to real estate and investment funds.
The updated rules, announced by the Ministry of Finance, are aimed at reducing compliance burdens and increasing transparency, reported the Emirates News Agency, also known as WAM.
The decision outlines conditions under which a non-resident juridical person — typically a legal entity — would be considered to have a nexus in the UAE, and therefore be subject to corporate tax.
Under the new rules, a nexus is deemed to exist for non-resident juridical investors in Qualifying Investment Funds in specific cases. If the fund distributes at least 80 percent of its income within nine months from the end of its financial year, the nexus is triggered on the date of dividend distribution.
If that threshold is not met, the nexus is established on the date the ownership interest is acquired. A nexus will also apply if the fund fails to meet diversity of ownership conditions during the relevant tax period.
The same logic applies to Real Estate Investment Trusts, where a nexus is triggered either on the date of dividend distribution — provided 80 percent or more of income is distributed within nine months — or from the date of acquiring ownership if the condition is not satisfied, according to WAM.
Outside of these scenarios, non-resident juridical persons that invest exclusively in QIFs or REITs will not be considered to have a taxable presence in the UAE.
The ministry said the decision is intended to ease compliance requirements for foreign investors while supporting the country's goal of fostering a transparent and competitive tax environment.
In December, the UAE announced the implementation of a 15 percent minimum top-up tax on large multinational companies, effective January.
The move aligns the country with the Organisation for Economic Co-operation and Development's global minimum tax framework, aimed at curbing tax base erosion and profit shifting by ensuring large corporations pay a minimum level regardless of where they operate.
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