To ensure transparency among stakeholders, the UAE Ministry of Finance has been releasing frequent updates on corporate taxes. Non-residents would be compelled to pay a tax on real estate income in the UAE, according to the most recent declaration. Continue reading to acquire an in-depth understanding of the situation.
HOW WILL TAX ON REAL ESTATE INCOME WORK IN THE UAE?
The release of Cabinet Decision No. 56 of 2023 for Federal Decree-Law No. 47 of 2022 was the most recent explanation. According to the declaration, international firms and non-resident juridical entities would be required to pay a 9% tax on income earned in the country from real estate and other immovable property. This might include any such property owned as an investment or utilized for commercial purposes.
Net income will be used to calculate the corporation tax. Thus, if the criteria outlined in corporation tax legislation are satisfied, relevant costs may be subtracted from taxable income when determining the amount of income.
The Ministry of Finance today has announced the issuance of Cabinet Decision No. 56 of 2023 on a Non-resident Person's Nexus in the UAE for the purposes of Corporate Tax.
— وزارة المالية | الإمارات (@MOFUAE) June 6, 2023
The decision is in line with international best practice, ensuring neutrality and equity between domestic… pic.twitter.com/wT8A2x9Zdv
EXEMPTIONS
The UAE Ministry of Finance highlighted exemptions when it announced the tax on real estate income. Any real estate income generated from immovable property owned by a foreign or UAE resident individual, whether direct or through a trust, foundation, or any other fiscally transparent model, would not be subject to this taxation if it is not a licensed business activity.
In addition, real estate investment trusts and other eligible investment funds may take advantage of the recently announced exemption from corporate tax on profits from UAE property, providing they satisfy the requirements.
HOW DO THEY SAY IT?
The Honorable Undersecretary of the Ministry of Finance Younis Haji Al Khoori said:
“The corporate tax treatment of income derived from UAE real estate and other immovable property by foreign legal persons is consistent with international best practice, which states that income derived from immovable property is taxable in the country where such property is located.”
HOW DO THEY SAY IT?
The Honorable Undersecretary of the Ministry of Finance Younis Haji Al Khoori said:
“The corporate tax treatment of income derived from UAE real estate and other immovable property by foreign legal persons is consistent with international best practice, which states that income derived from immovable property is taxable in the country where such property is located.”
Disclaimer: For more information and clarity on the Corporate Tax Law, please contact the UAE Ministry of Finance and the Federal Tax Authority.
