Read how corporate tax will affect real estate investors in the UAE

Those running real estate as a business will be subject to tax.

New Corporate Income Tax Regime in the UAE: Key Highlights: 

The UAE has introduced a new corporate income tax regime, impacting individuals and businesses involved in real estate activities.

Corporate Tax on Real Estate Businesses:

Individuals and businesses actively engaged in real estate as a business enterprise will be subject to a nine per cent corporate tax on net profits exceeding Dh375,000.

Real Estate Development as a Taxable Business:

Real estate development activities are considered a business and are liable for the nine per cent corporate tax on net profits exceeding Dh375,000. This tax applies uniformly to leasehold and freehold assets.

Taxation of Real Estate Owned for Investment:

Real estate owned by foreign or resident individuals, directly or through trusts or foundations, generates investment income. It is generally not subject to corporate tax, provided a corporate entity does not own it. If a corporate entity owns the property, capital gains tax applies upon its sale.

Taxation of Income from Immovable Property:

Income generated from immovable property is taxable in the country where the property is located. Therefore, foreign companies and non-resident juridical persons earning income from UAE real estate are subject to taxation.

Corporate Tax Registration Requirement:

Regardless of their income, companies must register for corporate tax purposes.

Exemption for Real Estate Investment Trusts (REITs):

Real estate investment trusts (REITs) are exempted from corporate income tax derived from investments in the UAE, provided they meet specific conditions.

Asset Revaluation and Transitional Provisions:

Revaluating assets (including immovable, intangible, and financial support) is crucial for many corporates. The transitional provisions allow companies to opt for revaluation of their assets to mitigate potential tax liabilities arising from gains or losses.

These new regulations signify a significant shift in the UAE’s taxation landscape, particularly for those involved in real estate activities, with implications for residents and foreign investors.