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Property Tax Dubai
Owners of rental property in Dubai, who are non-resident there are not liable to property tax on the earnings of that property when held as an individual but may be subject to corporation tax if held through a company. An Individual is considered non-resident in Dubai if s/he does not spend 183 days or more in any tax year (calendar year) in Dubai, does not have their primary residence or does not have a permanent establishment in Dubai.
In Dubai, land and property can be purchased by a non-resident. A foreigner may buy a property in his/her own name or through a company.
Taxes payable when purchasing a property are as follows:
Transfer fees are payable based on the selling price and are levied as follows – 1% payable by the vendor and 1% payable by the purchaser. Other fees are payable depending on the nature of the transaction.
AT: Currently there is no VAT system in place and as a result property transactions in Dubai are free of VAT. It must be noted however that the IMF have been suggesting that the United Arab Emirates engage this form of indirect taxation.Ongoing taxes payable in Dubai on property are as follows:
Income Tax Plain and simple – there is no income tax chargeable on any source of income including employment income and rental income. There are no tax administration offices, no tax returns and no tax rate Corporate Income Tax - There is no federal tax in UAE for general business. However with respect to Dubai only, The Dubai Income Tax Ordinance 1969, an organization carrying on a trade or business (includes services) is subject to tax on a tax scale of 0% top 50% depending on the income level. The rate not only depends upon the level of profit, but also the nature of the business especially those businesses that are set up in the “Free Zones”.Local Property taxes - Most Emirates impose Municipality Tax on annual rental payments. These are similar to rates as we know them, it is the tenants’ obligation to pay the tax, however, the tenants’ employer will typically pay the tax on behalf of the employee. The rates are currently 5% on residential rent and 10% on commercial rent. The landlord has nothing to pay here therefore. These can be payable annually in advance. Annual Community and Waste Collection Taxes: 10AED to 20AED per square foot per year, depending on location.
Other applicable taxes are as follows:
Capital Gains Tax (CGT) is not imposed on individuals in the UAE.
Inheritance Tax is not imposed on individuals in the UAE, however there are filing fees that will be incurred when re-registering the property in the name of the beneficiary.
If you are considering buying property abroad or have already made an overseas property investment, it is important that you are aware of your tax obligations and the property taxes associated with such a purchase.
Worldwide income
You will have an obligation to declare and file your UAE income with your tax return in your resident country. Please contact us for further details regarding double taxation relief and/or filing your Irish/ UK Tax Return.
For more information Property Tax
