Real estate activities

Under the updated framework, income from immovable property is bifurcated. Income from 'Commercial Property' in a Free Zone is Qualifying Income if the counterparty is a Free Zone Person. However, income from 'Residential Property' or 'Hotels/Apartments' is strictly Excluded Income regardless of the counterparty, taxed at 9%. Forensic focus is on the 'use-case' of the asset rather than its zoning alone.

Audit Red Flag

Reclassifying residential or hospitality property income as 'Commercial Property' lease income to exploit the 0% rate on transactions with other Free Zone Persons.

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