New UAE Cabinet decision on non-resident nexus for corporate tax regulations

This decision eases compliance for foreign investors and highlights the UAE's commitment to investment appeal

A nexus for non-resident investors in a QIF is established if 80 percent of income is distributed or upon ownership acquisition.

Published: Mon 7 Apr 2025, 9:27 AM

The UAE Ministry of Finance has disclosed the issuance of Cabinet Decision No. 35 of 2025, which addresses the Determination of a Non-Resident Person’s Nexus in the State for the Purposes of Federal Decree-Law No. 47 of 2022 concerning the Taxation of Corporations and Businesses. This new decision supersedes the provisions outlined in Cabinet Decision No. 56 of 2023. The latest decision delineates the specific scenarios in which a non-resident juridical investor in a Qualifying Investment Fund (QIF) or Real Estate Investment Trust (REIT) is deemed to possess a nexus in the UAE, thus rendering them subject to tax.

This announcement follows the recent issuance of Cabinet Decision No. 34 of 2025, which pertains to Qualifying Investment Funds and Qualifying Limited Partnerships under Federal Decree-Law No. 47 of 2022 concerning the Taxation of Corporations and Businesses.

Nexus criteria for non-resident investors

According to the new decision, a nexus for a non-resident juridical investor in a QIF that exceeds the real estate threshold will be established either on the date of the dividend distribution—if the QIF distributes 80 percent or more of its income within nine months after its financial year-end—or on the date the ownership interest is acquired, in cases where the QIF does not distribute at least 80 percent of its income within that nine-month timeframe. Furthermore, a nexus will be formed for a non-resident juridical investor in a QIF that does not satisfy the diversity of ownership conditions during the tax period in which the shortfall occurs.

Similarly, 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 percent or more of its income within nine months from its financial year-end—or on the date the ownership interest is acquired, if the REIT fails to distribute at least 80 percent of its income within that nine-month period.

Implications for foreign investors

Apart from the aforementioned scenarios, non-resident juridical investors who invest solely in a QIF and/or REIT will not be regarded as having a taxable presence in the UAE.

This decision alleviates compliance burdens for foreign investors and underscores the UAE government’s dedication to fostering an appealing investment climate for such investors.