Secure Your Investments: Understanding New UAE Property Tax Nexus
Definition of Immovable Property
- Any area of land over which rights or interests or services can be created.
- Any building, structure or engineering work attached to the land permanently or
attached to the seabed. - Any fixture or equipment which makes up a permanent part of the land or is
permanently attached to the building, structure or engineering work or attached
to the seabed.
Nexus for Corporate Tax on Foreign Companies
Under the Corporate Tax Law, a foreign company is considered to have a connection with the State in the following cases:
- Income from Property in the State: If the company earns income from property
in the State. This includes selling, renting (even subletting), using, or transferring
rights in property. - Income Adjusted by Law: If its income is changed based on specific rules in
Cabinet Decision No. 34 of 2025 (Article 3, Clause 2). - Investment Fund Income:
▪ It gets dividends from an investment fund that pays out 80% or more
of its property income within 9 months after its financial year ends,
▪ It owns part of a fund that does not pay out 80% of its property
income in that time.
Rules on Artificial Transfer of Property Rights
If a non-resident person transfers or gives up their rights to property in the State in an
artificial way — meaning there’s no real business reason for it, and it doesn’t reflect
actual economic activity — it will be seen as a scheme to avoid paying Corporate Tax
under Article 50 of the law.
Corporate Tax Registration Requirement
A non-resident person who has a connection (nexus) to the State under Article 2 must
register for Corporate Tax with the Authority, as required by Article 51 of the law.
Implementation Decisions by the Minister
To ensure the effective application of this resolution’s provisions, the Minister holds the authority to issue the necessary implementing decisions. These subsequent decisions will provide detailed guidance and clarification on specific aspects of the regulations, offering practical instructions for stakeholders. This process allows for flexibility and responsiveness in addressing any operational or interpretive needs that may arise during implementation.
Repeal of Previous Cabinet Decision
It is important to note that Cabinet Decision No. 56 of 2023 has been officially cancelled. However, this cancellation does not have a retroactive effect. Specifically, Cabinet Decision No. 56 of 2023 will continue to govern tax periods that commenced before the 1st of January, 2025. This ensures a smooth transition and prevents any disruption to ongoing tax calculations or reporting.
Tax Period Application
The guidelines outlined in this resolution will be applicable to all Tax Periods that commence on or after the 1st of January, 2025. This clear demarcation ensures that all relevant parties are aware of the precise timeframe within which these new regulations must be adhered to. Taxpayers should adjust their financial reporting and compliance procedures accordingly to align with this stipulated commencement date.
Publication and Effective Date
For transparency and to ensure widespread awareness, this Decision will be formally published in the Official Gazette. This publication serves as the official notification of the enacted regulations. Furthermore, the Decision will be legally effective from the date of its issuance, mandating immediate compliance from that point forward.
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