Corporate taxes in Dubai: what impact for real estate?
As you may know, Dubai will impose a 9% tax on corporate profits from June 2023. While rental income or salaries will not be impacted by the reform, it could have an impact on real estate prices, especially in new buildings. Dubai Immo, the leading French real estate agency in Dubai, offers you a reflection on the possible impact of the reform on the prices of new real estate.
A 9% tax on corporate profits from June 2023
International agreements at the highest level were made in 2022. The Dubai authorities have decided to impose a 9% tax on the profits of companies established in the United Arab Emirates. Only companies that generate more than the equivalent of US$100,000 are affected. Individuals and real estate income are not affected by the reform. By implementing this tax, the UAE is protecting itself from any assimilation to a tax haven or entry into a grey zone.
What impact will this have on property prices in Dubai?
Real estate developers and construction companies and their subcontractors will be subject to the tax if they are profitable. Thus, it is difficult to imagine that these companies will accept to simply pay the tax, even if it means reducing their net margins. We can expect construction costs to increase and therefore final prices to rise. Only new properties should be directly impacted by this increase, but we can imagine that the whole sector could follow the same trend. This is what Bloomberg and Knight Franck are predicting in their latest reports. They forecast a +13% increase in real estate prices in Dubai over 2023, and this on average. The increase could be much higher in certain high pressure areas such as Palm Jumeirah.
The information contained in this article does not represent investment advice.
Guillaume Giroux, Dubai Immo founder and real estate expert, Dubai, UAE
As founder of the Dubai Immo Group and a real estate investor, I bring you daily updates on the Dubai market. My aim is to provide you with all the keys you need to invest wisely and securely, by sharing my in-depth analysis and strategic advice.
