UAE expands the scope of the tax law for legal entities to include real estate income for non-residents.

DUBAI: The UAE Ministry of Finance has announced a cabinet decision to link non-residents to the UAE for tax purposes, Gulf News reported.

According to the decision, foreign companies and other non-residents will be subject to income tax on real estate and other non-exempt property located in the UAE and will be required to register for tax purposes. This applies to both real estate used in a business and real estate used as an investment. Tax will be calculated on the basis of net income. This allows expenses that meet the conditions of the tax law to be taken into account when calculating taxable income.

Minister of Finance Younis Haji Al Khouri said:

"The tax treatment of profits derived from property in the UAE is in line with international practice, according to which profits derived from real estate are taxed in the country where the property is located.

In general, income from investments in UAE real estate owned by foreign or UAE residents is not taxable unless the activity is a licensed activity. In addition, certain investment funds may also be exempt from real estate investment income tax, subject to certain conditions. Real estate funds and other qualified investment funds may also qualify for real estate investment income tax exemptions, provided all requirements are met. This decision comes in the first week of the new tax law taking effect.