UAE Cabinet Decision No. 35 of 2025 on Non-Resident Nexus for Corporate Tax
The UAE Ministry of Finance has announced Cabinet Decision No. 35 of 2025, issued on 27 March 2025, regarding the Determination of a Non-Resident Person’s Nexus in the State for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law).
The Decision is effective from the date of issuance and applies to tax periods commencing on or after 1 January 2025.
🔹 Key Provisions
- Definition of Immovable Property
The Decision clarifies that immovable property includes:- Land, buildings, and permanent engineering works.
- Fixtures and equipment forming a permanent part of such property.
- Nexus Conditions for Non-Resident Persons
A non-resident juridical person will be considered to have a nexus in the UAE if:- It derives income from UAE immovable property, including rights in rem, sale, letting (including subletting), disposal, or any other exploitation of such property;
- Its income is adjusted under Cabinet Decision No. 34 of 2025 relating to investment funds and qualifying limited partnerships;
- Nexus is created on the date dividends are distributed by an investment fund (that distributes at least 80% of its immovable property income within nine months), or on the date of acquiring an ownership interest in a fund that does not meet this distribution threshold.
- Artificial Transfers
The Decision also addresses artificial transfers of rights in immovable property. If such transfers lack a valid commercial or non-fiscal reason reflecting economic reality, they may be treated as arrangements to obtain a corporate tax advantage under Article 50 of the Corporate Tax Law. - Corporate Tax Registration Requirement
Any non-resident person with a nexus under this Decision must register for Corporate Tax with the Federal Tax Authority, as required by Article 51 of the Corporate Tax Law. - Repeal of Previous Decision
Cabinet Decision No. 56 of 2023 is repealed but remains applicable for tax periods commencing before 1 January 2025.
- Application Timeline
- This Decision applies to tax periods starting on or after 1 January 2025.
For more information, you may access the full Cabinet Decision on the official website of the Federal Tax Authority.
Disclaimer:
This update is provided for information purposes only and does not constitute legal or tax advice. Businesses potentially affected by these changes should seek advice from qualified professionals or consult the Federal Tax Authority (FTA) for official guidance.
For further information or assistance with UAE Corporate Tax and VAT matters, please contact our Tax Department.
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