Dubai has been a magnet for international real estate investment and if you’re one of those astute investors seeking to capitalize on the lucrative opportunities in the emirate, there’s a new tax rule you need to know about.
In a recent announcement, the UAE Ministry of Finance has revealed that non-residents will now be required to pay a 9 percent tax on any income derived from real estate or other immovable property in the UAE.
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
“Foreign companies and other overseas juridical persons will be subject to UAE corporate tax on income derived from immovable property located in the UAE,” the Ministry said in announcing Cabinet Decision No. 56 of 2023 for Federal Decree-Law No 47 of 2022.
Properties held for both investment purposes and business operations are covered by the law.
The UAE Ministry of Finance also announced exemptions on income from immovable property, whether owned directly or through a trust, foundation or any other investment fund, would not be subject to this tax if it is not a licensed business activity.
“Real estate investment income earned from UAE immovable property owned by foreign or UAE resident individuals would generally not be subject to corporate tax provided it is not a licensed business activity,” the announcement read. “Real Estate Investment Trusts and other qualifying investment funds may benefit from an exemption from corporate tax on income derived from the investment in UAE immovable property, provided that the relevant conditions are met.”
The UAE government implemented the federal corporate tax law on June 1, 2023. The new law levies a 9 percent tax on income of certain businesses that exceed Dh375,000 (USD 102,000). Companies operating in free zones are exempted from corporate tax.
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