Corporate Tax: FAQs for Investment Funds and Real Estate Investors in the UAE

To qualify, an investment fund must be regulated, operate as a collective investment vehicle, and meet any additional conditions set by the Federal Tax Authority (FTA).

No, dividends and capital gains earned by qualifying investment funds are generally exempt from Corporate Tax if the underlying ownership and participation conditions under the Corporate Tax Law are met. However, the fund must not be engaged in normal business activities beyond investment, and the exemption may depend on whether the fund is regulated and/or has applied for exempt status with the Federal Tax Authority.

Rental income from real estate owned by businesses or corporate entities is subject to Corporate Tax. However, income from personally held real estate investments is generally not subject to Corporate Tax unless it qualifies as a business activity.

Qualifying REITs benefit from Corporate Tax exemptions or reduced rates, provided they meet the specific conditions outlined in the Corporate Tax Law and its Executive Regulations. To qualify, a REIT must be regulated by a competent authority in the UAE, have at least 20% of its shares publicly traded on a recognized UAE stock exchange (or meet alternative widely held ownership requirements), maintain at least 75% of its assets in income generating real estate, and distribute a minimum of 90% of its net income to unitholders.

Yes, real estate investors operating through taxable entities can deduct expenses incurred wholly and exclusively for generating taxable income, such as maintenance, property management fees, depreciation, etc.

No, income from foreign real estate investments is not subject to UAE Corporate Tax. However, foreign taxes may apply in the jurisdiction where the property is located.

Gains from the sale of real estate are subject to Corporate Tax if the property is held by a business or corporate entity. Gains from personally held properties are generally exempt unless the activity qualifies as a business.

Family-owned real estate businesses are subject to the same Corporate Tax rules. Proper structuring through Family Business Law, Freezone structure for real estate holdings, Trusts & Foundations, inheritance planning, etc can optimize tax liabilities and compliance

Yes, investment funds must register with the FTA and file annual tax returns, even if they qualify for exemptions.

Real estate investors must maintain accurate financial records, prepare financial statements, and comply with reporting requirements if their activities fall within the Corporate Tax regime.

Yes, losses from real estate held as part of a business can generally be carried forward to offset future taxable income if the real estate activity is considered a taxable business, subject to conditions.

Cross-border transactions may be subject to UAE Corporate Tax based on the location of the property and tax payers residency and if the income is attributable to UAE-based operations. Foreign tax implications will also apply in the jurisdiction of the property.

Yes, certain government-owned entities or investment funds may qualify for exemptions under the UAE Corporate Tax law provided they meet specific criteria outlined in the legislation and relevant Cabinet Decisions.

They should:

• Register with the FTA.
• Maintain robust and accurate financial records.
• Seek guidance from tax professionals to ensure compliance and identify potential exemptions or deductions.

Penalties may include fines for late registration, failure to file tax returns, underreporting income, or non-payment/late payment of taxes due, etc