Corporate Tax & UAE REITs: What Investors Must Know in 2025
June 19, 2025
Corporate Tax & UAE REITs: What Investors Must Know in 2025
Real Estate Investment Trusts, better known as REITs, have become an increasingly popular investment vehicle in the UAE. They offer attractive income returns, diversification, and access to high-quality real estate without the hassle of direct property ownership.
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Until recently, the UAE tax treatment of REITs wasn’t crystal clear under the new corporate tax regime introduced in 2023. Thankfully, that has now changed.
In May 2025, the UAE’s Federal Tax Authority (FTA) released new clarifications specifically aimed at REIT investors, outlining how corporate tax
applies and under what conditions REITs can continue to enjoy tax exemptions.
Here’s what this means if you invest in REITs, manage a REIT structure, or advise clients who do.
What Is a REIT?
Let’s start with the basics. A Real Estate Investment Trust is a company that owns or finances income-producing real estate. REITs pool money from multiple investors and distribute the rental income as dividends.
UAE REITs are regulated under Emirates Securities and Commodities Authority (SCA) guidelines and are designed to offer tax-efficient exposure to real estate, particularly in Dubai and Abu Dhabi.
Corporate Tax in the UAE: A Quick Recap
As of 1 June 2023, the UAE levies corporate tax at 9% on taxable income exceeding AED 375,000. While this doesn’t apply to personal income, investment structures—like REITs—fall within the scope of corporate taxation.
That raised a big question for investors: Will my REIT distributions now be taxed?
The FTA’s new clarification helps answer that.
FTA Clarification: When Are REITs Exempt from Corporate Tax?
The FTA has confirmed that REITs can qualify for tax exemption, but only under specific conditions. These include:
1. REIT Must Be a Qualifying Investment Fund
To qualify, the REIT must meet the definition of a Qualifying Investment Fund under the Corporate Tax Law. That means:
- The main activity must be investing in real estate.
- The fund must be widely held and regulated.
- There must be diversification in the portfolio.
2. Ownership Thresholds Must Be Met
The FTA requires that no single investor (other than a governmental entity) holds more than 50% of the REIT.
This is designed to ensure that REITs remain publicly accessible, rather than acting as tax shelters for large private investors or families.
3. Regulatory Approval & Oversight
The REIT must be regulated by a competent authority such as the SCA or the Dubai Financial Services Authority (DFSA). Self-managed or unregulated structures will not qualify.
4. Income Distribution Requirements
REITs must distribute at least 80% of their annual income to investors. This ensures that the tax benefit is passed on through regular distributions, rather than stockpiling profits inside the structure.
What This Means for REIT Investors
If you invest in a qualifying UAE REIT, your dividend income remains tax-free at the REIT level—just as before. However:
- If your REIT doesn’t meet the FTA’s exemption criteria, its profits may now be taxed at 9%.
- REITs may need to adjust their ownership structure, governance model, or payout ratios to retain their tax-exempt status.
- This is particularly relevant for family offices, HNW individuals, and private real estate funds who may have previously relied on lightly structured or bespoke REITs.
Practical Steps for REIT Managers and Investors
- Review REIT compliance with the exemption criteria, especially ownership and distribution policies.
- Structure new REITs carefully to meet FTA conditions from the outset.
- Audit governance and regulation, ensure your REIT is fully licensed and externally overseen.
- Inform investors proactively if their REIT is making changes to retain tax exemption status.
Final Thoughts
The UAE’s updated REIT tax guidance is good news for most investors, but only if the REIT ticks all the right boxes.
If you’re managing a REIT, investing in one, or thinking about setting one up, it’s essential to get the structure right. That’s where we come in.
Contact our Dubai or UK office today for tailored advice on structuring tax-efficient real estate investments under UAE law.
Whether you're a REIT manager, property investor, HNW individual, or adviser working with clients in the real estate sector, we can support you with practical, commercially focused guidance.
We're also open to collaboration with introducers and partners who need expert support in this area.
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