The UAE’s Federal Tax Authority (FTA) has released new guidelines explaining how corporate tax will apply to investors in Real Estate Investment Trusts (REITs) that are considered “qualified funds” (i.e., exempt from corporate tax).
Starting from January 1, 2025, both UAE-based and international investors in these REITs will be taxed on 80% of the income earned from real estate owned by the fund. However, there’s an exception:
If the REIT pays out this income as dividends to investors within nine months after its financial year ends, and the investor didn’t receive a share of that income, then they won’t have to pay tax on it.
Other important points clarified by the FTA:
- Investors are seen as the legal owners of their share in the REIT.
- Tax rules also cover:
- How profits are shared with investors.
- What expenses investors can claim.
- What happens if an investor sells their share.
- How investment manager fees are handled.
- The fund’s duty to provide tax info to investors.
- The option for non-resident investors to appoint a tax agent to help manage their tax responsibilities.
These updates are meant to give investors more confidence and clarity when investing in UAE-based real estate funds.
Source: Gulf News
