Properties of non-residents in UAE are subject to tax

The UAE Ministry of Finance on Monday announced the issuance of Cabinet Decision No. 56 of 2023 on a Non-resident person’s Nexus in the UAE for the purposes of Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses (The Corporate Tax Law).

Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, said, “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. 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.”

Foreign companies and other non-resident juridical persons will be subject to UAE Corporate Tax on income derived from real estate and other immovable property located in the UAE and will be required to register in the UAE for Corporate Tax purposes. This applies to both immovable property that is held or used in a business and immovable property that is held for investment purposes in the UAE.

Non-resident juridical persons with UAE immovable property will be subject to Corporate Tax on a net-income basis. This allows for relevant expenditure that meets the conditions set out in the Corporate Tax Law to be deducted when calculating taxable income.

Real Estate Investment Income earned from UAE immovable property owned by foreign or UAE resident individuals, either directly or through a trust, foundation, or other vehicle that is treated as fiscally transparent for UAE Corporate Tax purposes, would generally not be subject to Corporate Tax provided it is not a licensed business activity. Further, Real Estate Investment Trusts and other Qualifying Investment Funds may benefit from an exemption from Corporate Tax on income derived from the investment in UAE immovable property, provided that the relevant conditions are met.

All Cabinet Decisions and Ministerial Decisions and guidelines relating to the Corporate Tax Law are available on the Ministry of Finance’s website: www.mof.gov.ae.

Meanwhile, the Ministry of Finance (MoF) organised an interactive seminar on financial policies and the labour market, held under the theme “Enabling Economic Growth” in Dubai. Representatives from local finance departments attended the symposium aimed at promoting constructive dialogue between policymakers and economists, and to further explore how financial policies affect the labour market.

Younis Haji Al Khoori, Under-Secretary of Ministry of Finance, reaffirmed the Ministry’s commitment to fostering an inclusive and cooperative environment that encourages policymakers, economists, business executives, researchers, and all other stakeholders to contribute to shaping the future of financial policies and labour markets. This is accomplished by bringing together various points of view in order to find solutions that promote sustainable economic growth and enhance labour market outcomes. Additionally, this symposium comes within the Ministry’s endeavours to encourage equitable economic opportunities and promote sustainable growth. Al Khoori also indicated that the Ministry is working continuously to devise sound financial policies that promote productive labour markets towards greater empowerment and building a better future for all.

Al Khoori said, “The Ministry of Finance is keen to continue strengthening communication and coordination with all local finance departments and provide the support needed to reach a more comprehensive understanding of the relationship between public finance policy and labour market outcomes. We are also keen to offer the tools and skills for them to analyse and design effective contributions to shaping public finance policies. All of which contributes to improving the performance of the labour market, achieving labour markets’ strategic objectives, and enhancing the UAE’s competitiveness in the financial and economic fields.”

The symposium’s programme included presentations about practices, interactive discussions, networking opportunities, case study analysis and practical exercises. It highlighted key topics including the role of financial policies in shaping the dynamics of the labour market and the goals of achieving financial sustainability while promoting employment. Additionally, it addressed the distribution of income through financial policies, market reforms and their impact on economic growth, as well as harnessing technology and digitisation to enhance labour market outcomes.

The symposium allowed participants to contribute to in-depth discussions, as well as exchange ideas and gain different insights from specialists. It also encouraged active participation through interactive sessions where attendees asked questions, exchanged experiences, and explored the latest approaches drawn from global experiences in facing pressing challenges.

The event was attended by representatives of the Department of Finance - Abu Dhabi; the Department of Finance - Dubai; the Sharjah Central Finance Department; the Department of Finance - Ajman; the Department of Finance - Umm Al Qaiwain; Ras Al Khaimah Finance Department; and the Department of Finance - Fujairah.

WAM