UAE corporate tax and property owners: an individual's rent and sale income is excluded under Cabinet Decision 49 of 2023 when no licence is held or required

What the Cabinet Decision says

Cabinet Decision No. (49) of 2023, issued on 8 May 2023 and in force from 1 June 2023, decides which activities of a natural person, resident or non-resident, are subject to UAE corporate tax under Federal Decree-Law No. 47 of 2022. Article (2) says an individual's business is taxed only where its total turnover exceeds AED 1,000,000 in a Gregorian calendar year. It then lists three kinds of income that are not treated as business activities subject to corporate tax, regardless of the amount: wages, personal investment income and real estate investment income. Article (1) defines real estate investment as any investment activity by a natural person related, directly or indirectly, to the sale, leasing, sub-leasing and renting of land or real estate property in the UAE that is not conducted, or not required to be conducted, through a licence from a licensing authority. Article (2) adds that a person who is not conducting a taxable business does not have to register for corporate tax.

How the tax authority reads it

The Federal Tax Authority's guide Real Estate Investment for Natural Persons (CTGREI1, October 2024) explains the rule. Real estate can be residential property, furnished holiday homes, commercial property, showrooms, warehouses, parking and land; regardless of the size, number or value of the properties and the income, the income is not subject to corporate tax as long as it meets the definition. It does not matter whether the tenant uses the property for a business. Income received through an agent or a licensed property management company can still be real estate investment income, depending on the facts; the agent's own licence does not change the owner's position. The exclusion applies to investment activities conducted in the UAE, for land or property located in the UAE and/or outside it. Excluded income is left out of the person's turnover, and registration is needed only once turnover from taxable business exceeds AED 1 million in a calendar year, applicable from 2024.

The licence test

The exclusion is lost where the activity is conducted through, or requires, a licence from a licensing authority. The FTA guide names examples of such authorities, including each emirate's Department of Economic Development, the Dubai Department of Economy and Tourism, the Abu Dhabi Department of Culture and Tourism and the Dubai Land Department. A document from the Dubai Department of Economy and Tourism permitting an individual to lease holiday homes is a licence for this purpose. Registering or ending a tenancy contract in Ejari in Dubai or Tawtheeq in Abu Dhabi is an administrative record, not a licence. If a licence is required but the owner has not obtained one, the income is still treated as business income. In that case the AED 1 million turnover threshold of Article (2) decides whether corporate tax is due.

What Al Mithaq adds

Our UAE residency page lists projects in Dubai, Abu Dhabi and Sharjah and lets you check in two taps which residency your budget opens. Our team in Kuwait can show you the expected rent and service charges of a home you like, explain how a yearly lease or a managed rental works, and send you the payment plan, so you can compare options with the official rules in mind.

Sources

• UAE Ministry of Finance: Cabinet Decision No. (49) of 2023 on Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person that are Subject to Corporate Tax (issued 8 May 2023, in force 1 June 2023), opened 7 November 2026
• UAE Federal Tax Authority: Corporate Tax Guide, Real Estate Investment for Natural Persons, CTGREI1 (October 2024), opened 7 November 2026
• Al Mithaq, Buy property in the UAE for residency page