To boost UAE’s appeal to investors, the Ministry of Finance has issued new tax rules for non-resident entities.
This latest update replaces Cabinet Decision No. 56 of 2023 and specifically focuses on nonresident investors with holdings in Qualifying Investment Funds (QIFs) or Real Estate Investment Trusts (REITs). The goal? To simplify compliance, offer greater tax clarity, and enhance the UAE’s competitiveness as a top-tier investment destination.
What exactly is a “nexus” in tax terms?
The concept of a “nexus” determines whether a person or entity has a sufficient connection to a country to be taxed there. In this case, the new decision outlines how and when non-resident juridical investors will be regarded as having such a presence in the UAE.
Federal Decree-Law No. 47 of 2022 set a 9% corporate tax on profits over AED 375,000.
few updates every foreign investor should know
Here’s how the new rules apply to non-resident investors in QIFs and REITs:
1. For Qualifying Investment Funds (QIFs):
A non-resident juridical investor will be deemed to have a nexus in the UAE if:
- The QIF fails to distribute at least 80% of its income within nine months of its financial year-end. In this case, the nexus arises on the date the investor acquires ownership.
- The QIF meets the 80% distribution condition but still breaches the real estate threshold. Here, the nexus arises on the date of the dividend distribution.
- The QIF fails to meet diversity of ownership conditions during any tax period.
2. For Real Estate Investment Trusts (REITs):
The conditions are almost identical:
- If the REIT distributes 80% or more of its income within nine months of the year-end, the nexus arises on the dividend distribution date.
- If not, the nexus is considered from the date of acquiring ownership interest.
In both cases, if none of the above conditions are met, then non-resident investors won’t be treated as having a taxable presence in the UAE.
Lower compliance, more confidence
This new move streamlines tax obligations for foreign investors and ensures they’re only taxed when certain clear conditions are met. It’s a significant step toward reducing administrative burdens while boosting regulatory clarity—two things that investors look for when choosing a jurisdiction.
The UAE’s tax updates support competitiveness and align with global reforms like OECD’s BEPS 2.0.
The bigger picture: UAE’s growing appeal to global investors
Over the past few years, the UAE has introduced a series of pro-investor reforms—from full foreign ownership in mainland companies to golden visas for property and business investors. The introduction of a corporate tax system, while seen as a major shift, was also implemented with one of the lowest rates globally.
By refining non-resident taxation, the government addresses investor concerns, especially in real estate and funds.
What should investors do now?
If you’re a non-resident juridical investor or manage investment portfolios that include REITs or QIFs in the UAE, it’s time to:
- Review your fund’s compliance with the 80% income distribution rule.
- Assess ownership structures and determine if your investment triggers a UAE tax nexus.
- Consult with a tax advisor to align your investment strategy with the updated Cabinet Decision No. 35 of 2025.
A win for clarity and competitiveness
With this new decision, the UAE once again demonstrates its forward-thinking approach to balancing tax compliance with investment appeal. The clear-cut rules on taxable nexus reduce the grey areas that often trip up investors—and signal a strong intent to maintain the UAE’s edge as a global financial and investment hub.
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