The Council of Ministers issues a decision regarding the subjection of non-residents to corporate tax
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The Ministry of Finance announced the issuance of Cabinet Decision No. 56 of 2023 regarding the relationship of non-residents in the country for the purposes of Federal Decree-Law No. 47 of 2022 regarding corporate and business tax (“Company Tax Law”).
Younis Haji Al-Khoury, Undersecretary of the Ministry of Finance, said: “The corporate tax system’s treatment of income generated from real estate in the UAE and other immovable funds belonging to foreign legal persons is in line with international best practices, which stipulates that income generated from immovable funds is subject to tax in The country in which the property is located. This, of course, confirms that the corporate tax law in the UAE includes features that respect international tax principles and guarantee neutrality and equality between local and foreign companies that generate income from immovable funds in the UAE.
Foreign companies and other non-resident legal persons are subject to UAE corporate tax on income generated from real estate and other immovable property located in the country, and therefore they are required to register in the UAE for corporate tax purposes. This applies to immovable funds that are kept or used in business, as well as immovable funds that are kept for investment purposes in the country.
Non-resident legal persons who have immovable property in the UAE are subject to corporate tax on the basis of net income, which allows the deduction of related expenses that meet the conditions set out in the corporate tax law when calculating taxable income.
In general, real estate investment income earned from immovable property owned by foreign individuals or residents of the country – either directly or through a trust, foundation or any other means that is treated as financially transparent for the purposes of corporate tax in the UAE – is not subject to formal General for corporate tax provided it is not a licensed business activity. Furthermore, REITs and other qualified investment funds can be exempt from corporate tax on income earned from investing in immovable funds provided the relevant conditions are met.