Question 1

Who does the 9% tax rate apply to?

Accepted Answer

Taxable profits exceeding AED 375,000 on real estate held by UAE tax resident companies are subject to corporate tax at a rate of 9% unless a relief or exemption applies. This includes to all rental income and gains on disposal of real estate held by the company.

The 9% corporate tax rate applies to all UAE mainland, UAE free zone and foreign entities managed and controlled from the UAE.

Question 2

Under what conditions can a foundation qualify for tax transparent status

Accepted Answer

The Corporate Tax Law includes specific provisions for Family Foundations, enabling them to make an application to be treated as an Unincorporated Partnership, which is transparent for corporate tax purposes. To obtain the tax transparent status, the foundation must qualify as a Family Foundation, which requires meeting the following conditions:

It is established for the benefit of identified or identifiable natural persons, or for the benefit of a public benefit entity, or both.
Its principal activity is to receive, hold, invest, disburse, or otherwise manage assets or funds associated with savings or investment.
It does not conduct any activity that would be classed as a Business or Business Activity according to the Corporate Tax Law if it had been undertaken, or if its assets had been held, directly by its founders, settlor, or any of its beneficiaries.
Its main or principal purpose is not the avoidance of corporate tax.
It satisfies any other conditions prescribed by the Minister of Finance.

Question 3

Can I charge low rent to avoid paying tax?

Accepted Answer

Due to the application of transfer pricing rules, UAE tax resident companies are required to
charge a fair market rent on any properties that are used personally by related
parties and pay corporate tax at the rate of 9% on this rent.

Question 4

Where can entities own property

Accepted Answer

GCC nationals (including UAE nationals), Dubai companies wholly owned by GCC nationals and public joint stock companies can own real estate anywhere in Dubai.

In Dubai, foreign ownership is permitted in areas designated as freehold.

The Dubai Land Department (DLD) has established policies and agreements for Designated Areas that govern the eligibility of non-GCC individuals and entities to register as real estate owners.

This includes a Memorandum of Understanding (MoU) between DLD and DIFC, which allows certain DIFC entities, including DIFC Foundations, to own property in these areas as foreign entities. Additionally, there are specific provisions for real estate investment funds.

Taxation of UAE real estate structures

DET tax policy questions

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Taxation of UAE real estate structures

DET tax policy questions