CTP005 Explained: UAE Corporate Tax Clarification on REIT Investors
A Strategic Insight for Businesses and Accounting Professionals
As the UAE strengthens its commitment to a transparent and robust tax framework, the Federal Tax Authority (FTA) has issued Corporate Tax Public Clarification CTP005, which directly addresses the Corporate Tax treatment of investors in Real Estate Investment Trusts (REITs). This is a vital update not only for investors but also for top accounting firms in Dubai, auditing & accounting firms, and professionals offering accounting and bookkeeping services, who are at the forefront of helping businesses adapt to the new Corporate Tax regime.
What Is CTP005 All About?
CTP005 clarifies the tax treatment of Resident and Non-Resident juridical investors in REITs that are exempt from Corporate Tax by qualifying as a Qualifying Investment Fund.
To be exempt, the REIT must meet:
- All conditions in Article 10(1) of the Federal Decree-Law No. 47 of 2022, and
- Article 4(1) of Cabinet Decision No. 34 of 2025, relating to Qualifying Investment Funds and Partnerships.
Once a REIT qualifies and receives approval from the Federal Tax Authority (FTA), it will be exempt from Corporate Tax starting from the tax period specified in the application or a date determined by the FTA.
From 1 January 2025: What Changes for Investors?
Even if the REIT is fully exempt from Corporate Tax, its investors are not entirely tax-free. For tax periods starting on or after 1 January 2025, the following will apply:
- Juridical Resident and Non-Resident investors in the REIT must pay Corporate Tax on 80% of their share of the REIT’s Immovable Property Income.
- This income is taxed proportionately, based on the investor’s ownership.
- If a REIT distributes dividends within 9 months after the end of its financial year and an investor disposes of their entire investment before the distribution, special provisions apply regarding how corporate tax is calculated.
This approach ensures that while REITs are incentivized to invest in UAE real estate, the income benefits derived by investors do not go entirely untaxed.
Implications for Accounting and Tax Professionals
This clarification signals an important shift in how the UAE regulates passive income from real estate. For accounting and audit professionals, it introduces new responsibilities:
- Accurately classifying and calculating taxable portions of REIT income.
- Helping clients structure REIT investments to ensure tax efficiency.
- Ensuring timely dividend distributions to minimize tax exposure.
- Advising clients on how to stay compliant while maximizing returns.
This is a crucial moment for auditing & accounting firms in Dubai, who are now strategic partners in helping businesses and high-net-worth individuals navigate these complex tax developments.
Why Partnering with Expert Firms Matters
Given the technical and regulatory nuances in CTP005, partnering with experienced accounting and bookkeeping service providers in Dubai is more important than ever. These firms help with:
- Interpreting tax laws and clarifications
- Optimizing investment structures and tax planning
- Preparing REIT and investor disclosures in line with UAE Corporate Tax law
- Ensuring documentation and reporting standards are met
Whether you are a REIT manager, institutional investor, or corporate holding company, working with a top accounting firm in Dubai ensures that you’re both compliant and strategic in your approach to the new tax law.
Key Takeaways
- CTP005 clarifies that REITs may be exempt from Corporate Tax, but investors still bear a tax obligation on 80% of their immovable property income share.
- From 1 January 2025, businesses and investors must update their tax positions accordingly.
The role of accounting firms is now pivotal in interpreting and applying these changes effectively.
Ready to Stay Ahead?
If your business is involved in REITs or real estate investment structures, now is the time to consult with one of the leading auditing and accounting firms in Dubai. With expert guidance and proactive planning, you can ensure full compliance with CTP005 while optimizing your tax position for long-term success.