Construction of roads and railways

Construction of roads and railways involves immovable property. Under the UAE Corporate Tax framework, income from the construction of immovable property is categorized as an Excluded Activity to prevent tax erosion on domestic infrastructure development. Even if performed by a Qualifying Free Zone Person, this revenue is subject to the 9% standard rate.

Audit Red Flag

Contract splitting where 'Project Management' is billed from a Free Zone entity at 0% while 'Physical Labor' is billed from a Mainland entity to minimize the 9% tax base.

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