The UAE Ministry of Finance said that the cabinet had approved a decision regarding a non-resident’s nexus in the UAE for the purposes of corporate tax. Tax on real estate income in the UAE for non-residents please continue reading.
The ruling states that international businesses and other non-resident juridical persons will be required to register for corporation tax purposes. And will be subject to corporate tax on revenue. That is obtained from real estate and other immovable property located in the UAE. This holds true for both moveable properties kept or used for commercial purposes. And also for movable property retained in the UAE for investment purposes.
Corporate tax will be applied to non-resident juridical persons who own real estate on a net-income basis. To get a complete understanding of tax on real estate income in the UAE for non-residents please continue reading.
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TAX ON REAL ESTATE INCOME IN THE UAE – HOW WILL IT WORK?
A significant modification to tax laws was recently announced by the UAE Ministry of Finance. All income derived from real estate and other domestic moveable property will now be subject to a 9% tax on non-residents. Including foreign corporations and non-resident juridical entities. Property utilized for business or held as an investment is subject to this tax.
Based on net income, the corporate tax rate will be determined. It is significant to remember that relevant expenses may be subtracted from taxable income if certain requirements outlined in the corporate tax code are satisfied.
EXEMPTIONS FOR REAL ESTATE INCOME
A few exemptions for real estate income have also been defined by the UAE Ministry of Finance. Unless it is deemed to be a licensed economic activity, immovable property owned by foreigners or UAE residents. Whether directly or through a trust, foundation, or other fiscally transparent forms, will not be taxed.
As long as they satisfy the requirements, real estate investment trusts and qualified investment funds can also gain from a corporate tax exemption on revenue from UAE property.
THOUGHTS FROM YOUNIS HAJI AL KHOORI
Younis Haji Al Khoori said, 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. Maintaining knowledge of these policies and their effects is crucial.