Historically, the UAE has been famous for its tax-free environment, with no individual income tax and little corporation taxation governed by Federal Decree-Law No.60 of 2023. However, to comply with global norms and diversify revenue, the UAE implemented a federal corporate tax system on June 1, 2023. Under it:
FTA’s recent clarification addresses the tax treatment of REIT investors entitled to corporate tax exemption. The key points are as follows:
As per FTA’s clarification released today, resident and non-resident legal persons that invest in a corporate tax-exempt REIT will be taxed with corporate tax pro rata over 80% of immovable property income derived by the REIT for tax periods that start on or after the 1st day of January 2025.
Suppose the REIT distributes its immovable property income within nine months after the close of its financial year, and the investor has disposed of all their ownership interest before the distribution. In that case, they are exempt from corporate tax on that income.
The FTA has provided several major compliance requirements for both investors and REITs. These are:
The FTA has provided several major compliance requirements for both investors and REITs. These are:
Persons with assets in the UAE for individual investment but not carrying on a business will usually not pay corporate tax. If the activity of the individual is subject to a commercial license and yields over AED 1 million a year, though, they are liable for corporate tax.
Businesses that own real property are taxed in a corporate style, depending on the nature and location of the property:
Dubai’s property market is a big hit with investors from all over the world. Why? It’s in a great spot, has excellent roads and buildings, and makes it easy for people to invest. The government also just made the tax rules clearer. This helps everyone understand what to do and builds trust.
Dubai also gives some nice extras to people who buy property here:
Comprehension of the changing tax scenario is essential for real estate investors in the UAE. The recent guidance by the FTA offers welcome clarity, ensuring that investors make informed choices and stay in compliance.
For individuals considering investing in Dubai’s thriving real estate sector, having skilled experts by your side can prove invaluable. GRD Off Plan agents are dedicated to finding the ideal real estate opportunities, providing informed guidance, and walking clients through each transaction phase. Whether an old hand or newcomer to the real estate scene, GRD Off Plan is equipped to lead the way through the intricacies and find the ideal property for your investment purposes.
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