Abu Dhabi: “The Gulf”
Today, the Ministry of Finance in the United Arab Emirates issued Federal Decree-Law No. of 2022. 47 issued Cabinet Resolution No. 56 of 2023 for the purposes of s. (the “Corporate Tax Act”).
Undersecretary of the Ministry of Finance, Younis Haji Al Quri, said: The corporate tax system’s treatment of income derived from real estate in the UAE and other immovable funds owned by foreign legal entities is in line with international best practices. Property generated from immovable funds is taxable in the country of residence.
This naturally ensures that the corporate tax law in the UAE incorporates aspects that respect international tax principles and ensures neutrality and equality between local and foreign companies deriving income from immovable funds in the UAE.
Foreign companies and other non-resident legal entities are subject to UAE corporate tax on income derived from real estate and other immovable property located in the country and therefore must be registered in the UAE for corporate tax purposes. This applies to immovable funds held or used in business and immovable funds held for investment purposes in the country.
Non-resident legal entities owning immovable property in the UAE are subject to corporate tax based on net income, which allows deduction of relevant expenses that meet the conditions set out in the Corporate Tax Law when calculating taxable income.
In general, real estate investment income derived from immovable property owned by foreign individuals or residents of the country – directly or through a trust, a trust or other means deemed financially transparent for the purposes of corporate tax in the UAE – is not subject to the formal general corporate tax and is a licensed business activity. Not. Also, REITs and other qualified investment funds may be exempt from corporate tax on income earned by investing in immovable funds if relevant conditions are met.