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UAE Announces New Tax Rules for Non-Resident Investors
The UAE Ministry of Finance has issued significant updates to its corporate tax regulations, impacting non-resident investors in Qualifying Investment Funds (QIFs) and Real Estate Investment Trusts (REITs). These changes, detailed in Cabinet Decision No. 35 of 2025, aim to simplify compliance and further attract foreign investment.
Key Changes to UAE Tax Rules
The new rules clarify when a non-resident juridical investor is considered to have a "nexus" in the UAE, triggering tax liability under Federal Decree-Law No. 47 of 2022. Previously, Cabinet Decision No. 56 of 2023 governed this, but has been replaced. The updated regulations focus on two main scenarios:
- Real Estate Threshold Breaches: For both QIFs and REITs, a nexus arises if the real estate asset threshold (currently 10%) is breached. If a QIF distributes 80% or more of its income within nine months of its financial year-end, the nexus is established on the dividend distribution date. Otherwise, it's established on the date of ownership acquisition.
- Ownership Diversity Failure: A non-resident investor in a QIF that fails to meet ownership diversity conditions in a tax period will also establish a nexus in that period. This emphasizes the importance of adhering to diversification requirements.
Importantly, non-resident juridical investors exclusively invested in QIFs and/or REITs, and complying with all regulations, will not be considered to have a taxable presence. The Ministry emphasizes this move reduces compliance burdens for foreign investors, showcasing the UAE's commitment to a business-friendly environment.
Simplified Compliance for Foreign Investors
The updated rules offer a streamlined approach for compliant investors. Foreign juridical investors in REITs and QIFs who distribute 80% or more of their income within nine months of the financial year-end only need to register for Corporate Tax upon dividend distribution. This simplifies the process and reduces administrative complexities.
Looking Ahead
These revised UAE tax rules reflect a proactive effort to enhance the investment climate and attract foreign capital. By offering clear guidelines and reducing administrative hurdles, the UAE continues to solidify its position as a global investment hub. For detailed information and the full text of Cabinet Decision No. 35 of 2025, refer to the official Ministry of Finance website.
