UAE Corporate Tax: Investors get clarity on funds in real estate investment trusts
FTA clarifications relate to investor tax status in ''qualified funds'
Dubai: Investors have been given clarity on their tax status when they have exposures in real estate investment trusts (REITs) exempt from corporate tax being a ‘qualified fund’.
For tax periods beginning on or after January 1, 2025, resident and non-resident entities investing in a REIT exempt from corporate tax will be subject to tax on a pro-rata basis on 80% of the immovable property income generated by the REIT.
If the REIT distributes the immovable property income within nine months of the end of its financial year - and the investor has not received a share of the dividends - they will not be subject to corporate tax on the immovable property income realised from the fund.
For the purpose of UAE Corporate Tax law, the investor in a REIT is considered the legal owner of the ownership interest in the fund.
The Federal Tax authority’s clarification extends to all matters related to the tax treatment of investors in qualified REITs exempt from corporate tax. These include:
The distribution of profits by a real estate fund to its investors.
The expenses incurred by the investor in relation to his or her investment in the fund.
The disposal of his or her investment in the fund.
The adjustment of fees accruing to the investment manager.
The obligation of the fund to provide its investors with the necessary information to calculate their taxable income.
The appointment of a tax agent to act – on behalf of the non-resident investor in a real estate investment fund – to assist them in fulfilling their tax obligations.
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