UAE Cabinet issues decision on non-residence's nexus linked to corporate tax law
UAE – The UAE Ministry of Finance has announced a new decision that specifies the cases in which a non-resident juridical investor in a Qualifying Investment Fund (QIF) or Real Estate Investment Trust (REIT) is considered to have a nexus and is therefore subject to taxation.
The Cabinet issued Decision No. 35 of 2025 on the Determination of a Non-Resident Person's Nexus in the State for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses which replaces the provisions of Cabinet Decision No. 56 of 2023, according to an official statement.
This follows the issuance of Cabinet Decision No. 34 of 2025 on Qualifying Investment Funds and Qualifying Limited Partnerships for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
Under the new decision, a nexus for a non-resident juridical investor in a QIF that breaches the real estate threshold will arise either on the date of the dividend distribution if the QIF distributes 80% or more of its income within nine months from its financial year-end, or the date the ownership interest is acquired, in the case where the QIF fails to distribute at least 80% of its income within nine months from its financial year-end.
A nexus will also be created for a non-resident juridical investor in a QIF that fails to meet the diversity of ownership conditions in the tax period in which the failure occurs.
Furthermore, a nexus for a non-resident juridical investor in a REIT will arise either on the date of the dividend distribution if the REIT distributes 80% or more of its income within nine months from its financial year-end, or the date the ownership interest is acquired, in the case where the REIT fails to distribute at least 80% of its income within nine months from its financial year-end.
Other than the above cases, non-resident juridical investors investing exclusively in a QIF and/or REIT will not be considered to have a taxable presence in the UAE.
This decision reduces foreign investors' compliance burdens and reflects the UAE government's commitment to providing an attractive investment environment for such investors.
Earlier in 2025, the UAE finance ministry announced a decree covering the introduction of the top-up tax for multinational enterprises, providing further details on the UAE Domestic Minimum Top-up Tax (UAE DMTT).
Source: Mubasher
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