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03 October 2023

Non-residents will be taxed on income from UAE property

By E247

The UAE Ministry of Finance (MoF)has announced the issuance of a cabinet decision on a non-resident person's Nexus in the UAE for the purposes of corporate tax.

Foreign companies and other non-resident juridical persons will be subject to UAE corporate tax on income derived from real estate and other immovable property located in the UAE and will be required to register in the UAE for corporate tax purposes, the MoF said in a statement. 

This applies to both immovable property that is held or used in a business and immovable property that is held for investment purposes in the UAE, it said.
Younis Haji Al Khoori, Undersecretary of the MoF, said: “The Corporate Tax treatment of income derived from UAE real estate and other immovable property by foreign juridical persons is in line with international best practice which stipulates that income derived from immovable property is taxable in the country in which such property is located."

Real estate investment income earned from UAE immovable property owned by foreign or UAE resident individuals, either directly or through a trust, foundation or other vehicle that is treated as fiscally transparent for UAE corporate tax purposes, would generally not be subject to corporate tax provided it is not a licensed business activity, the statement noted. 
Real Estate Investment Trusts (REITs) and other Qualifying Investment Funds can avail an exemption from corporate tax on income derived from the investment in UAE immovable property, provided that the relevant conditions are met, it said.

The UAE started a 9% corporate tax on Thursday, with relief for SMEs and likely exemptions for export-focused free zone activities.