Abu Dhabi – The UAE Ministry of Finance has issued Cabinet Decision No. 35 of 2025, introducing new provisions to determine when a non-resident person is considered to have a nexus in the UAE for the purposes of Federal Decree-Law No. 47 of 2022 on corporate taxation. The decision replaces Cabinet Decision No. 56 of 2023, refining tax rules to ease compliance and strengthen the UAE’s appeal as an international investment hub.
The newly published framework provides clarity on tax obligations for non-resident juridical investors—particularly those involved in Qualifying Investment Funds (QIFs) and Real Estate Investment Trusts (REITs).
Key Tax Nexus Conditions for Non-Resident Investors
Under the updated regulations, a nexus—or taxable presence—will arise for non-resident investors in the following scenarios:
For QIFs:
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If the QIF distributes 80% or more of its income within nine months of its financial year-end, a tax nexus will be created on the dividend distribution date.
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If the QIF fails to distribute the 80% threshold within nine months, the nexus is established on the date of ownership acquisition.
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A tax nexus also arises if the QIF fails to meet the diversity of ownership requirements during the relevant tax period.
For REITs:
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Similarly, a nexus arises either on the dividend distribution date (if 80% or more of income is distributed within nine months) or on the ownership acquisition date (if the REIT fails to meet this threshold).
In all other cases, non-resident juridical investors who only invest in QIFs or REITs and meet the above requirements will not be considered to have a taxable presence in the UAE.
Promoting an Investment-Friendly Environment
The Ministry of Finance emphasized that the updated rules aim to simplify compliance for foreign investors and promote transparency, supporting the UAE’s broader goal of establishing itself as a competitive, globally integrated economy.
This follows the recent issuance of Cabinet Decision No. 34 of 2025, which set parameters for recognizing Qualifying Investment Funds and Qualifying Limited Partnerships under the federal corporate tax regime.
“The UAE continues to adapt its tax framework to balance fiscal responsibility with investor-friendly policies,” the Ministry stated, adding that the changes are designed to “reinforce confidence among institutional investors and align with international best practices.”
Strategic Implications for Global Investors
The new decision is expected to bring increased certainty to multinational corporations and fund managers who structure cross-border investments through UAE-based vehicles. It underscores the country's commitment to attracting foreign capital, while ensuring compliance with global standards for tax transparency and fairness.
