UAE announces Corporate tax rules for non-resident person's nexus
By Aishwarya Nair | First Published Jun 5, 2023, 3:56 PM ISTAccording to the decision, foreign companies and other overseas legal entities (non-resident juridical persons) will be subject to UAE Corporate Tax on income earned from immovable property located within the UAE. Both immovable properties held or used for commercial purposes as well as immovable property kept in the UAE for investment purposes are encompassed by this.
Dubai: The Cabinet Decision on non-resident persons' connection in the UAE has been announced by the UAE Ministry of Finance.
According to the decision, foreign companies and other overseas legal entities (non-resident juridical persons) will be subject to UAE Corporate Tax on income earned from immovable property located within the UAE. Both immovable properties held or used for commercial purposes as well as immovable property kept in the UAE for investment purposes are encompassed by this.
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Corporate Tax on a net-income basis will apply to non-resident juridical persons who own immovable property in the UAE. This enables the deduction of pertinent expenses that adhere to the requirements outlined in the Corporate Tax Law for determining taxable income.
“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,” said Younis Haji Al Khoori, Undersecretary of the Ministry of Finance.
“The UAE's Corporate Tax Law incorporates features that honor international taxation principles and ensures neutrality between domestic and foreign companies earning income from immovable property in the UAE.”
Real estate investment income from immovable property in the UAE earned by foreigners or UAE residents, whether directly or through a trust, foundation, or other vehicles that are considered fiscally transparent for purposes of UAE corporate tax, would typically not be subject to corporate tax provided it is not a permitted business activity. Real Estate Investment Trusts and other Qualifying Investment Funds can also be eligible for an exemption from corporate tax on income from investments in immovable property in the UAE, provided that the necessary requirements are satisfied.
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