The UAE Ministry of Finance has issued Cabinet Decision No. 35 of 2025, which establishes new rules for determining when a non-resident juridical investor has a nexus in the UAE under Federal Decree-Law No. 47 of 2022 on Corporate Taxation. This decision replaces Cabinet Decision No. 56 of 2023 and aims to enhance compliance ease while maintaining an attractive investment climate.
Under the updated regulations, a nexus is created for non-resident juridical investors in Qualifying Investment Funds (QIFs) and Real Estate Investment Trusts (REITs) in specific cases:
- For QIFs, a nexus arises if:
- The fund distributes 80% or more of its income within nine months from its financial year-end, in which case the nexus applies on the dividend distribution date.
- The fund fails to meet the 80% distribution requirement, in which case the nexus applies on the ownership acquisition date.
- The fund does not meet diversity of ownership conditions within a given tax period.
- For REITs, a nexus arises if:
- The trust distributes 80% or more of its income within nine months from its financial year-end, in which case the nexus applies on the dividend distribution date.
- The trust fails to meet this 80% requirement, in which case the nexus applies on the ownership acquisition date.
Apart from these specific cases, non-resident juridical investors who invest solely in QIFs and/or REITs will not be considered to have a taxable presence in the UAE.
This decision reduces compliance burdens for foreign investors and reinforces the UAE government’s commitment to fostering a business-friendly investment environment.
