The UAE Ministry of Finance has issued a new decision that outlines the circumstances under which a foreign (non-resident) person or entity is considered to have a taxable presence, or “nexus,” in the country under the Corporate Tax Law. The update, which replaces Cabinet Decision No. 56 of 2023, aims to provide greater clarity for foreign investors, particularly those engaged with Qualifying Investment Funds (QIFs) and Real Estate Investment Trusts (REITs).
The revised guidelines define specific cases in which non-resident juridical investors — companies or entities rather than individuals — are considered to have a tax nexus in the UAE and are therefore subject to corporate tax obligations.
According to the new decision, a tax nexus for non-resident investors in a QIF will be established under two scenarios. First, if the fund breaches the real estate threshold and distributes 80% or more of its income within nine months of the end of its financial year, the nexus is triggered on the date of the dividend distribution. Second, if the fund fails to meet the 80% distribution requirement within that same timeframe, the nexus arises on the date the investor acquires an ownership interest in the fund.
Additionally, a tax nexus will also be triggered if a QIF fails to meet diversity of ownership conditions during a given tax period.
Similarly, the same criteria apply to non-resident investors in REITs. A nexus will be formed either on the date of the dividend distribution — if the REIT meets the 80% income distribution threshold within nine months — or on the date of ownership acquisition if the threshold is not met. These measures align the treatment of REITs with QIFs in terms of determining taxable presence.
Importantly, the Ministry emphasized that outside these specific circumstances, non-resident juridical investors exclusively investing in QIFs or REITs will not be deemed to have a taxable nexus in the UAE. This provision aims to ease compliance burdens on foreign investors and further strengthens the UAE’s reputation as a competitive and investor-friendly financial jurisdiction.
The decision reflects the government’s ongoing efforts to create a transparent, streamlined tax environment that supports international investment while maintaining compliance with global tax standards.
The Ministry of Finance reaffirmed its commitment to supporting economic growth and enhancing the UAE’s attractiveness as a global business and investment hub through clear and practical tax policies.
