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A REIT that meets all the legal conditions under Article 10(1) of the UAE Corporate Tax Law and Cabinet Decision No. 34 of 2025 can apply to be exempt from Corporate Tax as a Qualifying Investment Fund. If granted, this exemption applies from the specified tax period. However, from 1 January 2025, corporate (juridical) investors in such exempt REITs must pay Corporate Tax on 80% of the REIT’s prorated immovable property income, unless they no longer hold any ownership and did not receive a dividend distribution within 9 months after the REIT’s financial year-end.

Purpose

The purpose of this public clarification is to clarify the following:

1. The income that will be taxed in the hands of juridical persons that are investors in a REIT.
2. The relevant Tax Period in which the income shall be taxed for such investors.
3. The compliance obligations of the REIT and the investors and other related matters.

Clarification

1. Taxable Income in the Hands of Juridical Investors in a REIT

• Juridical persons (both Resident and Non-Resident) investing in an exempt REIT (i.e., a REIT recognized as a Qualifying Investment Fund) will be subject to Corporate Tax on:
  • 80% of their share of the REIT’s prorated Immovable Property Income (not the full amount).
• This applies even though the REIT itself is exempt.
• Immovable Property Income includes rental income and capital gains from UAE-based properties held by the REIT.

2. Relevant Tax Period

• The taxation of REIT income in the hands of juridical investors begins for Tax Periods starting on or after 1 January 2025.
• Tax is applied in the Tax Period in which the REIT’s financial year ends (e.g., if the REIT’s year ends on 31 December 2025, the income is taxed in the 2025 Tax Period).

3. Compliance Obligations

For REITs:

• Must notify investors of their share of the REIT’s Immovable Property Income.
• Must disclose relevant details to the Federal Tax Authority (FTA) in a prescribed form and timeline.

For Investors (Juridical Persons):

• Required to:
  • Include 80% of their share of the REIT’s Immovable Property Income in their CT return.
  • File and pay Corporate Tax accordingly.
• Exemption: If the investor disposes of all units before dividend distribution and receives no dividend within 9 months of year-end, they are not taxed on the REIT’s immovable property income.
• Wrap-upWhether you are operating in Dubai, Ras-Al Khaimah, Abu Dhabi, or some places else in the Emirates, deciding on the right partner could make all the difference. As the corporate tax planning in Dubai landscapes evolves- especially with the nuanced provisions like the taxation of investors, businesses need the best corporate tax consultants in Dubai, Ras-Al Khaimah, Abu Dhabi, and the broader UAE. Likewise, for VAT regulations, businesses can benefit from working with the best consultants for VAT in Dubai, Ras-Al-Khaimah, Abu Dhabi, and throughout the UAE.

Read the official announcement