UAE Non-Residents Taxed on Property Income

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The UAE’s Ministry of Finance (MoF) has revealed that it will issue a cabinet decision regarding non-resident people’s Nexus for corporate tax purposes. According to the MoF, foreign companies and non-resident juridical people will be expected to register in the UAE for corporate tax purposes. They will be liable for UAE corporate tax on income derived from real estate and other immovable properties located in the UAE. This applies to both immovable property used in a business and immovable property held for investment purposes in the UAE.

According to Younis Haji Al Khoori, the Undersecretary of the Ministry of Finance (MoF), the tax treatment of income generated by foreign entities from UAE real estate and other immovable properties is consistent with global best practices. He explains that international standards dictate that revenue generated from immovable properties is taxable in the country where that property is located. The statement further noted that income from real estate investments in UAE immovable properties, owned by either foreign or UAE resident individuals, is generally not subject to corporate tax if it is not a licensed business activity and is earned either directly or through a fiscally transparent vehicle like a trust or foundation.

According to a recent statement, Real Estate Investment Trusts (REITs) and other qualifying investment funds can benefit from an exemption from corporate tax on income earned from investing in immovable property in the UAE as long as they meet the requirements. The UAE started initiating a 9% corporate tax.

However, small and medium-sized enterprises (SMEs) can apply for relief, and there may be exemptions for export-oriented free zone activities.

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