What is the purpose of the recent updates to tax rules in the UAE?

The updates are meant to make the UAE's investment climate better and follow international best practices. This helps the economy grow in a sustainable way and attracts more investment from both local and international sources.

Which rules have been changed for limited partnerships and investment funds in the UAE?

The tax rules for Qualifying Investment Funds (QIFs) and Qualifying Limited Partnerships have been updated under Federal Decree-Law No. 47 of 2022. These changes are also explained in Cabinet Decision No. 34 of 2025.

When does a non-resident investor in a QIF have to pay taxes in the UAE?

A non-resident investor in a QIF has to pay taxes if the QIF gives out 80% or more of its income within nine months after the end of its fiscal year. They also have to pay taxes if the QIF doesn't give out at least 80% of its income in that time, and the ownership interest is bought.

What happens if a Real Estate Investment Trust (REIT) gives out 80% or more of its income?

If a REIT gives out 80% or more of its income within nine months after the end of its fiscal year, a connection is created for a non-resident investor. This means they will have to pay taxes in the UAE.

How does the UAE's new rule affect international investors and their tax rules?

The new rule makes it easier for international investors. Non-resident investors who only invest in QIFs and/or REITs do not have to pay taxes in the UAE, except in certain situations.

UAE issues latest Corporate Tax rules to Boost Investments in UAE

According to the Ministry of Finance, the United Arab Emirates has revised the tax treatment of limited partnerships and investment funds as part of its continuous efforts to improve the nation’s investment climate and bring it into line with international best practices.

Updated regulations for Qualifying Investment Funds (QIFs) and Qualifying Limited Partnerships under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses are outlined in Cabinet Decision No. 34 of 2025, which supersedes the previous Cabinet Decision No. 81 of 2023.

The action is to encourage sustainable economic growth in the United Arab Emirates and draw in more international and local investment.

Corporate Tax rules to Boost Investments

The new ruling outlines the circumstances in which a non-resident legal investor in a

Real Estate Investment Trust (REIT) or Qualifying Investment Fund (QIF) is deemed to have a connection to the United Arab Emirates and is thus liable to pay taxes.

For the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, this comes after Cabinet Decision No. 34 of 2025 on Qualifying Investment Funds and Qualifying Limited Partnerships was issued.

If the QIF distributes 80 percent or more of its income within nine months of the end of its fiscal year, a nexus will be created for a non-resident juridical investor in the QIF that violates the real estate threshold. If the QIF does not distribute at least 80 percent of its income within nine months of the end of its fiscal year, a nexus will be created on the date the ownership interest is acquired. For a non-resident juridical investor in a QIF that does not satisfy the diversity of ownership requirements during the tax period in which the failure takes place, a nexus will also be established.

The date of the dividend distribution, if the REIT distributes 80% or more of its income within nine months of the end of its fiscal year, or the date the ownership interest is acquired, if the REIT does not distribute at least 80% of its income within nine months of the end of its fiscal year, will be the nexus for a non-resident juridical investor in the REIT.

Non-resident juridical investors that make just QIF and/or REIT investments shall not be regarded as having a taxable presence in the UAE, with the exception of the aforementioned situations.

This ruling lessens the compliance requirements for international investors and demonstrates the UAE government’s dedication to creating an alluring investment climate for them.

Frequently Asked Questions on UAE issues latest Corporate Tax rules to Boost Investments

When can I claim a VAT adjustment for bad debt?

You can claim the adjustment if you’ve issued a proper tax invoice, paid VAT to FTA, written off the receivable in your books, waited six months from the supply date, and notified the customer.

What evidence must I keep for a bad debt VAT claim?

You must keep: • Tax invoices • Proof of VAT payment • Accounting records showing the write-off • Copies of communication with the customer

How do I report the VAT adjustment in my return?

Use the adjustment column in Box 1 of your VAT return for each relevant emirate. Enter the VAT amount you want to reclaim.

What if the customer pays after I’ve claimed bad debt relief?

If the customer later pays, you must declare the VAT for that payment in your next VAT return.

How can Mubarak Al Ketbi (MAK) Auditing help with bad debt VAT adjustments?

We check your eligibility, review your records, prepare your VAT return, and make sure you follow every law to reclaim your VAT with no headaches.