Finance

Corporate Tax Law on UAE Real Estate

Corporate tax in the UAE applies to all transactions of corporate entities in the business of real estate development, management, and construction. This includes income from rent, maintenance, purchase, and sale of residential and commercial properties or land.

The corporate income tax law also encompasses a wide range of activities and services about the construction, development, provision, and management of the property of UAE-registered businesses with the exemption of free zone entities that limit activities within UAE free zones.

The income of real estate agencies in UAE from brokerage fees and commissions from sales and other income structures are taxable under the new Corporate Tax law. Duly licensed and registered UAE businesses offering advice, judgment, and assistance on the sale, acquisition, utilization, disposal, planning, conception, and/or preservation of properties or improvements thereon are to adhere to the corporate tax law provisions.

The UAE corporate tax rate is 9% which applies to businesses and individuals carrying out commercial activities with over AED 375,000 annual taxable income.

Capital Appreciation From the Sale of Properties Held by Corporate Entities

Corporate entities and individuals with trade licenses investing in UAE real estate and owning commercial and/or residential properties anticipate profit from price appreciation of properties when inflation and demand are high. Although subject to further clarification, corporate tax in UAE may be imposed on capital gains realized from the sale of properties of UAE mainland businesses.

Free zone entities in Dubai and the other emirates are not subject to UAE corporate tax law provided the properties are not on the mainland and/or they don’t conduct business outside the free zone(s).