The UAE Ministry of Finance has issued Cabinet Decision No. 35 of 2025 on April 6, outlining the rules for determining when a non-resident juridical person has a taxable nexus in the UAE. The regulation updates and replaces Cabinet Decision No. 56 of 2023 under the framework of Federal Decree-Law No. 47 of 2022 on Corporate Taxation.
This development plays a crucial role in clarifying tax obligations for foreign investors in Qualifying Investment Funds (QIFs) and Real Estate Investment Trusts (REITs), enhancing transparency and certainty in the UAE’s evolving corporate tax regime.
New Guidelines for Non-Resident Nexus
Cabinet Decision No. 35 of 2025 details the scenarios in which a non-resident juridical investor in a QIF or REIT will be considered to have a nexus — and thereby a taxable presence — in the UAE. This comes in conjunction with Cabinet Decision No. 34 of 2025, which defines Qualifying Investment Funds and Qualifying Limited Partnerships for taxation purposes.
Criteria for Nexus in QIFs
For a non-resident juridical investor in a QIF, a nexus is established under the following circumstances:
- If the QIF distributes 80% or more of its income within nine months after the end of the financial year, the nexus date is the dividend distribution date.
- If the QIF fails to distribute at least 80% of its income in that timeframe, the nexus applies from the date the ownership interest is acquired.
- A nexus also arises if the QIF fails the diversity of ownership requirement during any tax period.
Criteria for Nexus in REITs
Similarly, a non-resident juridical investor in a REIT is considered to have a UAE nexus if:
- The REIT distributes 80% or more of its income within nine months, making the dividend distribution date the nexus point.
- If the REIT fails to meet this distribution threshold, the nexus is dated to when the ownership interest is acquired.
Exemption and Policy Objective
Importantly, non-resident juridical investors that exclusively invest in compliant QIFs or REITs — outside the aforementioned cases — will not be treated as having a taxable presence in the UAE.
This move is aimed at reducing compliance burdens for foreign investors and reinforcing the UAE’s position as a competitive, investor-friendly jurisdiction. It showcases the country’s commitment to ensuring regulatory clarity in line with international tax practices.
“The decision promotes transparency while encouraging long-term investment flows into UAE funds,”
noted a spokesperson from the Ministry of Finance.
The UAE’s updated Cabinet Decision No. 35 of 2025 delivers clear criteria for non-resident investors’ tax obligations related to QIFs and REITs. By limiting when a nexus is triggered, the government simplifies compliance and upholds its vision of creating a pro-business, tax-efficient investment climate.
For legal or business setup guidance regarding UAE Corporate Tax Law, you can get expert assistance from RIZ & MONA Consultancy or email us at info@rizmona.com.
