Tax Guidelines for Non-Resident Investors
The UAE has taken another step toward enhancing its business environment and tax transparency with the issuance of Cabinet Decision No. 35 of 2025 which provide new Corporate Tax guidelines for Foreign Investors in UAE. It outlines when foreign investors in Qualifying Investment Funds (QIFs) and Real Estate Investment Trusts (REITs) are liable to pay corporate tax in the country.
This latest move, announced by the UAE Ministry of Finance, updates and replaces Cabinet Decision No. 56 of 2023 and is part of the ongoing efforts to align with global tax standards while maintaining the UAE’s reputation as a business-friendly hub.
Who Is Affected by the Corporate Tax Guidelines for Foreign Investors?
Under the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, the UAE introduced a federal corporate tax system effective from June 1, 2023, with a standard 9% tax rate on taxable profits exceeding AED 375,000. Income below that threshold remains exempt.
The new Cabinet Decision No. 35 of 2025 now provides critical clarity on when non-resident juridical entities—such as foreign companies investing in Qualifying Investment funds (QIFs) and Real Estate Investment Trust (REITs) —are considered to have a “nexus” in the UAE, thereby triggering corporate tax liability.
Key Corporate Tax Implications for Non-Resident Investors
According to the decision, a non-resident investor in a QIF or REIT will be subject to corporate tax in the UAE if:
- The QIF or REIT distributes 80% or more of its income within nine months of the financial year-end. In such cases, the taxable nexus is established on the date of dividend distribution.
- If the fund fails to distribute at least 80% of its income within the same period, the nexus is established on the date the investor acquires ownership.
- For QIFs, a nexus is also created if they fail to meet the required diversity of ownership conditions during the relevant tax period.
This decision ensures that non-resident juridical persons investing in QIFs or REITs are only taxed when they have a substantial connection to the UAE, thus reducing unnecessary compliance burdens.
However, foreign investors who exclusively invest in QIFs or REITs and do not meet the nexus conditions will not be considered to have a taxable presence in the UAE.
UAE’s Commitment to a Competitive and Transparent Tax Environment
With these implementation UAE is refining the corporate tax regulations and highlight the intent to keep balance between revenue generation and international competitiveness. Also, it provide more clarity to the investors and help them make informed decisions and stay complaint with local tax laws.
UAE is consistently enhancing tax legislation and providing more clarity for the businesses and it is extremely important to know the latest changes and stay complaint. Alpha Auditing provide complete support to the business in terms of corporate tax.
How Alpha Auditing Can Help You Navigate Corporate Tax in the UAE?
At Alpha Auditing, we specialize in providing end-to-end corporate tax services tailored to both local and international clients. Our team of experienced tax professionals offers:
- Corporate tax registration
- Corporate tax return filing
- Expert guidance on tax residency and nexus rules
- Tax optimization and compliance review
- Advisory for foreign investors in QIFs and REITs
- Keep track of UAE tax laws amendments and stay complaint
So if you are running a multinational corporation or a real estate investor, Alpha Auditing provide comprehensive tax services. Being a professional tax consultancy firm in UAE we take full responsibilities in terms of tax compliance and make sure you avoid fines and penalties.