New developments impacting investment funds and non-resident investors

26 May 2025 – On 27 March 2025, the United Arab Emirates (UAE) Federal Tax Authority (FTA) issued Cabinet Decision No. 34 of 2025, repealing Cabinet Decision No. 81 of 2023, followed by Cabinet Decision No. 35 of 2025, Ministerial Decision No. 96 of 2025 and Public Clarification CTP005 under Federal Decree-Law No. 47 of 2022.

All the above Decisions are applicable to Corporate Tax (CT) periods commencing on or after 1 January 2025.

What you need to know

The UAE Ministry of Finance (MoF) and FTA have issued significant updates affecting the tax treatment of investment funds, Real Estate Investment Trusts (REITs), and their investors. These changes were introduced through the following:

• Cabinet Decision No. 34 of 2025 – New framework for exempting Qualifying Investment Funds (QIFs), REITs, and Qualifying Limited Partnerships (QLPs)
• Cabinet Decision No. 35 of 2025 – Updated criteria for determining UAE nexus of non-resident juridical persons
• Ministerial Decision No. 96 of 2025 – Temporary relief for newly listed REITs
• Public Clarification CTP005 – Clarification on income inclusion, nexus, and compliance obligations for REIT investors

These decisions mark a notable evolution in the UAE’s CT landscape for the asset management sector.

Key Takeaways

• Expanded Exemption Regime for Funds
  Cabinet Decision No. 34 of 2025 expands the tax exemption to include QLPs alongside QIFs and REITs. Core conditions for exemption have been simplified by removing the minimum investment professional requirement and shifting the ownership threshold breach consequences to investors, rather than the fund.
• New Nexus Rules for Non-Resident Investors
  Cabinet Decision No. 35 of 2025 introduces nexus triggers for non-resident juridical persons investing in exempt QIFs or REITs. Where certain ownership thresholds in Funds; or UAE immovable property exposures are breached, taxable income inclusion and CT registration obligations are triggered.
• Targeted REIT Relief for Market Access
  Ministerial Decision No. 96 of 2025 provides temporary relief for REITs listing between 1–31 May 2025, reducing the public float threshold from 20% to 10% to ease market access while maintaining exemption eligibility.
• Clarified Tax Obligations for REIT Investors
  FTA’s Public Clarification CTP005 provides guidance on timing of income inclusion, treatment of undistributed income, nexus implications, and compliance obligations for investment managers and custodians. Juridical investors must adjust their taxable income for 80% of UAE immovable property income unless distribution thresholds are met. Natural persons are excluded from such adjustments.

For more details on each update please see attached PDF.

Next Steps

Taxpayers, fund managers, and non-resident investors should review the new rules to assess their impact on fund structuring, investor compliance, and tax registration obligations. In particular:

• QIFs and QLPs should revalidate their exempt status under the revised eligibility conditions,
• Non-Resident investors with exposure to UAE immovable property or high fund ownership stakes should evaluate potential nexus and registration triggers,
• REITs seeking exemption must ensure compliance with updated thresholds, distribution, and disclosure obligations.

Notice

The above is only a brief summary of the current update, is valid at the time of circulation and is based only on information currently available in the public domain which is subject to change. This alert has been written in general terms and does not constitute any form of advice or recommendation by Deloitte and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we highly recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.

Deloitte and Touche Middle East would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances.