UAE Ministry Of Finance Issues New Cabinet Decision On Non-Resident Person Nexus For Corporate Taxation

The Ministry of Finance has introduced Cabinet Decision No. 35 of 2025, which outlines when a non-resident juridical investor in a Qualifying Investment Fund (QIF) or Real Estate Investment Trust (REIT) is deemed to have a nexus in the UAE. This decision replaces Cabinet Decision No. 56 of 2023 and aligns with Federal Decree-Law No. 47 of 2022 on corporate taxation.

Under the new guidelines, a non-resident juridical investor in a QIF will establish a nexus if certain conditions are met. If the QIF distributes at least 80% of its income within nine months after its financial year-end, the nexus arises on the dividend distribution date. If not, it occurs when the ownership interest is acquired.

Similarly, for REITs, a nexus is created under comparable circumstances. A non-resident juridical investor in a REIT will have a nexus if the REIT distributes at least 80% of its income within nine months from its financial year-end, with the nexus arising on the dividend distribution date. If this threshold is not met, it occurs upon acquiring ownership interest.

This decision also considers cases where diversity of ownership conditions are not met by QIFs during any tax period. In such instances, non-resident juridical investors will have a nexus for that period. However, investors solely involved in QIFs or REITs without breaching these conditions will not be taxed in the UAE.

The introduction of these regulations aims to ease compliance burdens for foreign investors while maintaining an appealing investment climate in the UAE. The government’s approach reflects its dedication to fostering an environment conducive to international investments.

Cabinet Decision No. 34 of 2025 further supports these measures by addressing Qualifying Investment Funds and Limited Partnerships under Federal Decree-Law No. 47 of 2022 regarding corporate taxation.

With inputs from WAM