UAE outlines new tax rule for foreign investors and non residents All you need to know

The United Arab Emirates has announced major changes to corporate tax rules in a bid to attract additional domestic and foreign investments. The changes were announced by the Ministry of Finance over the weekend and outlines scenarios that will see non-residents subjected to taxation in the country.“The new decision specifies the cases in which a non-resident juridical investor in a Qualifying Investment Fund (QIF) or Real Estate Investment Trust (REIT) is considered to have a nexus in the UAE and is therefore subject to taxation,” read an update shared by the official Emirates News Agency.Details shared by the news agency suggest that a nexus will arise for QIF investors that breach the real estate threshold either on the date of the dividend distribution or the date the ownership interest is acquired. The first applies if the QIF distributes 80% or more of its income within nine months from its financial year-end. The date of ownership interest acquisition will be considered if the QIF fails to distribute at least 80% of its income within the same stipulated period. A nexus will also be created for a non-resident juridical investor in a QIF that fails to meet the diversity of ownership conditions in the tax period in which the failure occurs.

nexus for REIT investors

Meanwhile a nexus for REIT investors will arrive “on the date of the dividend distribution” if the trust distributes 80% or more of its income within nine months of its financial year end. It will apply from the date the ownership interest is acquired in case the REIT fails to distribute at least 80% of its income within this timeframe.The Ministry of Finance also specified that non-resident juridical investors investing exclusively in a QIF or REIT would not be considered to have a taxable presence in the country — except in the cases outlined. The move is intended to “reduce foreign investors’ compliance burdens”.