According to Federal Decree Law No. 47 of 2022 on Corporate Taxation, the UAE Cabinet has honestly mentioned the conditions under which a nonresident juridical individual can be taken into consideration to have a Taxable nexus within the United Arab Emirates by issuing Cabinet Decision No. 35 of 2025 on March 27, 2025. The following primary requirements are mentioned within the new Cabinet Decision No. 56 of 2023, which supersedes it for all tax-periods starting on or after January 1, 2025.
Taxable Nexus in the UAE
Under paragraph (c) of Clause (4) of Article 11 of the Corporate Tax Law, a foreign juridical person will have a taxable nexus in the UAE in any of the following circumstances:
- Income from Immovable Property
Deriving income from Immovable Property in the State—through right in rem, sale, disposal, assignment, letting (including sub‑letting), or any other exploitation.
- Income Adjustments under Decision 34 of 2025
When its income is adjusted pursuant to Clause (2) of Article 3 of Cabinet Decision No. 34 of 2025.
- Investment Fund Distributions or Acquisitions
- If an investment fund distributes ≥ 80 percent of its Immovable Property income within nine months of its financial year end; or
- On acquiring an ownership interest in a fund that fails to distribute that threshold within the timeline.
Nexus arises on the distribution date or acquisition date, respectively.
- Artificial Transfers
Any artificial transfer or disposal of a right in rem over UAE Immovable Property—i.e., lacking valid commercial or non fiscal rationale and economic reality—will be treated as a corporate tax avoidance arrangement under Clause (1) of Article 50 of the Corporate Tax Law.
Registration Requirement
A Non Resident Person with a nexus as per Article 2 must register for Corporate Tax with the Federal Tax Authority in accordance with Article 51 of the Corporate Tax Law.
Repeals, Application, and Effective Date
Repeals
- Repeal of Decision No. 56 of 2023:
That Decision is repealed for tax periods commencing on or after 1 January 2025 but remains effective for earlier periods.
- Conflictual Provisions:
Any provisions conflicting with this Decision are repealed.
Application
- This Decision applies to all corporate tax periods beginning on or after 1 January 2025
Publication and Effective Date
- It shall be published in the Official Gazette and took effect upon issuance on 27 March
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FAQs
What is Decision No. 35 of 2025?
It defines how non-resident companies establish a taxable nexus in the UAE under the new corporate tax law.
When does Cabinet Decision No. 35 of 2025 take effect?
It applies to all tax periods beginning on or after 1 January 2025.
What is a taxable nexus for non-residents in the UAE?
It refers to a non-resident company’s connection to the UAE that requires them to pay corporate tax.
Do non-resident companies need to register for UAE corporate tax?
Yes, if they establish a taxable nexus, they must register with the Federal Tax Authority.