Free zone company owning property
Our free zone company owns an office in the free zone and rents part of it out. How is the rent taxed?
The situation
Income from immovable property has special rules. Rent from commercial property in a free zone with free zone persons can be qualifying in some cases, while other property income is taxed at standard rates.
The law
- Cabinet Decision 100 of 2023: Treatment of immovable property income for QFZPs
What it means for you
Example: rent from leasing a free zone office to another free zone company may be qualifying under the commercial property rules, but rent from a residential flat or from a mainland tenant is not. Property income is often excluded from the de minimis calculation but taxed at 9 percent. Check the exact rules before filing.
What to do
- List each property, location and tenant.
- Apply the immovable property rules.
- Keep it outside the de minimis test where the rules say so.
- Tax non-qualifying property income at the standard rate.
We can do this for youQualifying Free Zone Person review and return: substance, qualifying income, de minimis test and audited accounts: AED 6,000