Comprehensive Guide to Tax on Real Estate Income in the UAE for Non-Residents

We will provide you with detailed information and insights to help you understand the intricacies of the tax system. Our aim is to offer valuable guidance and assist you in navigating the tax landscape effectively. Stay tuned to learn all the essential details about the tax on real estate income in the UAE for non-residents.

Tax on Real Estate Income in the UAE - How Does It Work?

The UAE Ministry of Finance has recently announced a significant update regarding tax regulations. Non-residents, including foreign companies and non-resident juridical persons, will now be required to pay a 9% tax on all income generated from real estate and immovable property within the country. This tax applies to properties held as investments or used for business purposes.

The corporate tax rate will be calculated based on the net income. It is important to note that relevant expenses can be deducted when determining taxable income, provided that the conditions set out in the corporate tax law are met.

Exemptions for Real Estate Income

The UAE Ministry of Finance has also clarified certain exemptions for real estate income. If the immovable property is owned by foreign or UAE resident individuals whether directly or through a trust, foundation or other fiscally transparent models, it will not be subject to taxation unless it is considered a licensed business activity.

Additionally, real estate investment trusts and qualifying investment funds can benefit from an exemption from corporate tax on income derived from UAE property as long as they meet the specified conditions.

Insight from His Excellency Younis Haji Al Khoori

His Excellency Younis Haji Al Khoori, the Undersecretary of the Ministry of Finance, has emphasized the alignment of the tax treatment with international best practices. According to him, "The corporate tax treatment of income derived from UAE real estate and other immovable property by foreign juridical persons is in line with international best practice, which stipulates that income derived from immovable property is taxable in the country in which such property is located."

Conclusion

The tax on real estate income for non-residents in the UAE reflects the country's long-term goals and objectives of the UAE corporate tax system. It is essential to stay informed about these regulations and their implications.