In a Cabinet Decision, the UAE Ministry of Finance has addressed non-residents' nexus in the UAE.

As a result of 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 in the UAE. In the UAE, this applies to both immovable property held or used in a business and to immovable property held for investment purposes.

A non-resident juridical person with UAE immovable property is subject to Corporate Tax on a net-income basis. To calculate taxable income, relevant expenditures that meet the requirements of the Corporate Tax Law can be deducted.

“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.”

The income generated from UAE immovable property owned by foreigners or UAE residents, either directly or through trusts, foundations, or other vehicles that are fiscally transparent for UAE Corporate Tax purposes, is generally exempt from Corporate Tax, provided it is not a licensed business activity.

If the relevant conditions are met, Real Estate Investment Trusts and other Qualifying Investment Funds may also be exempt from Corporate Tax on income derived from UAE immovable property investments.

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