The Federal Tax Authority (FTA) has issued a public clarification on the corporate tax treatment of investors in Real Estate Investment Trusts (REITs) that qualify as exempt funds under UAE law.
The move aims to provide greater transparency ahead of the corporate tax rollout starting January 1, 2025.
According to the clarification, both resident and non-resident legal entities investing in exempt REITs will be taxed on 80% of the REIT’s UAE immovable property income, on a pro-rata basis. However, investors can avoid this tax if the REIT distributes its property income within nine months of the financial year’s end and the investor no longer holds any ownership interest at the time of distribution.
The guidance outlines how income from UAE immovable property—defined as net profit from leasing, selling, or using such property—should be calculated based on the REIT’s financial statements. It also details the responsibilities of both the REIT and its investors, including the provision of financial information and the appointment of a tax agent for non-resident investors.
The FTA’s update offers comprehensive insight into how profit distributions, investment-related expenses, asset disposals, and management fees are treated for tax purposes. It aims to help stakeholders in the real estate investment sector understand their obligations under the new corporate tax regime.
This clarification forms part of the FTA’s ongoing efforts to increase compliance readiness and ensure a smooth transition as corporate tax regulations come into effect across the UAE.
News Source: Emirates News Agency
