Corporate Tax on Rental Income in UAE: Who Must File, Penalties and How to Avoid Them

Do landlords pay Corporate Tax on rental income in the UAE?

It depends on who owns the property: an individual renting out property held in their own name, with no licence required, pays no Corporate Tax on that rent, while a company that owns property pays Corporate Tax on its rental profit. The ownership line on the title deed matters more than the amount of rent.

Salary is also outside Corporate Tax, so an employee who owns two rented flats has nothing to file for either. A full explanation of the individual rules is in our guide to Corporate Tax for individuals and natural persons.

When is rent from personally owned property outside Corporate Tax?

Rent is outside Corporate Tax when you own the property as an individual and the letting does not require a licence from a licensing authority. That covers most owners who lease a few apartments on annual tenancy contracts, however much rent they collect.

Situations that change the answer

Short-term letting is covered in our guide to Corporate Tax for holiday home operators.

How is rent taxed when property is held in a company?

A company that owns property pays 9% on its taxable rental profit above AED 375,000, after deducting the costs of earning the rent. It must register and file even if the building is empty for the year, because registration applies to every UAE company regardless of revenue.

Companies that carry investment property at fair value face another decision. Unrealised valuation gains count as accounting profit, so many property companies elect to be taxed on gains only when a property is sold. That election is normally made with the first return and is hard to reverse, so it should be decided before filing, not after.

What do property companies need to know about depreciation, loans and VAT on commercial rent?

Depreciation, loan interest and VAT are where most property company returns go wrong, because each depends on a choice or a split that has to be made in the accounts first.

Split land from building

When a company buys a villa or building, the purchase price covers land and structure. Only the structure is depreciated, so allocate the cost using a valuation or a reasonable basis and keep the working. Our depreciation guide covers useful lives. Properties carried at fair value raise separate depreciation questions that should be reviewed case by case.

Loans from shareholders

A shareholder who lends the company money to buy property is a connected person, so any interest charged must be at arm’s length and disclosed with the return. An interest-free shareholder loan is simpler, but record it clearly. Our director loan account guide explains the records.

Commercial rent and VAT registration

Rent on offices, shops and warehouses is taxable at 5%, while residential rent is exempt and does not count towards the threshold. A landlord, individual or company, must register for VAT once taxable commercial rent passes AED 375,000 in 12 months. Mixed buildings need input VAT apportioned between the two, which our real estate VAT guide explains.

How does a property company file its Corporate Tax return?

A property company’s return starts from its rent roll and fixed asset register, then moves to EmaraTax.

What records does a landlord company need to keep?

A property company keeps title, lease and cost records for 7 years for Corporate Tax, and longer for VAT where real estate is involved.

• Title deeds and purchase agreements with the land and building split
• Tenancy contracts, Ejari or municipality registrations and the rent roll
• Bank statements showing rent cheques and transfers into the company account
• Service charge, maintenance, insurance and management fee invoices
• Loan agreements and interest statements, including shareholder loans
• Valuation reports where property is carried at fair value

Which deadlines apply to property companies?

A property company with a 31 December 2025 year end must file its return and pay by 30 September 2026.

What penalties apply if a property company does not file?

A property company that never registered pays AED 10,000 and then AED 500 for each month its return is late, under Cabinet Decision 75/2023 as amended.

Consider a property company that registered late and files its first return 12 months late: AED 10,000 plus AED 6,000. If rent of AED 450,000 went into the owner’s personal account and was left out, the extra tax, an incorrect return penalty and 1% a month on the difference follow once it is found.

6 Corporate Tax mistakes landlords and property companies make

These errors come up again and again when we review property company files.

• Never registering a company that only holds property. Every UAE company registers, so the AED 10,000 penalty applies to passive holding companies too.
• Collecting company rent into a personal account. The income is still the company’s and the return becomes incorrect.
• Missing the decision on unrealised gains. Valuation uplifts end up taxed before any property is sold.
• Depreciating land. Only the building is depreciable, so the deduction is overstated.
• Ignoring VAT on commercial rent. A late VAT registration costs AED 10,000 plus the VAT that should have been charged.
• Assuming a nil-profit year needs no return. An empty building still means a return; see our nil Corporate Tax return guide.

How do property companies avoid penalties?

Run the rent roll as the backbone of the books and review elections before year end. Our bookkeeping from AED 599 a month suits small portfolios.

• Monthly: bank every rent cheque into the company account and tick it off the rent roll
• Monthly: record service charges, repairs and management fees with invoices
• Quarterly: track commercial rent against AED 375,000 for VAT
• Quarterly: review vacancies, bounced cheques and rent receivables
• Annually: update valuations or depreciation and the land and building split
• Annually: confirm connected person loans and prepare the disclosure
• Annually: file by 30 September even when the building made a loss

What should a landlord company do if it is late or receives an FTA notice?

Register if you have not, then file every overdue return and pay the tax, because each month adds to the late return penalty. Our missed deadline guide sets out the order, and catch-up bookkeeping rebuilds past years from tenancy contracts and bank statements.

If rent paid to a personal account was left out of a filed return, correct it through a voluntary disclosure before the FTA raises it. To challenge a penalty, request reconsideration within 40 business days and escalate to the Tax Disputes Resolution Committee if it is refused; our reconsideration guide explains the request.

Worked example: a property company with AED 2.4M of rent

An illustrative Dubai property company owns two office floors and 12 apartments, with a 31 December 2025 year end. Office rent is AED 1.5M and apartment rent is AED 900,000. After service charges, maintenance, management fees, loan interest and building depreciation, profit is AED 520,000.

The standard tax is 9% x (520,000 minus 375,000) = AED 13,050, while relief brings it to nil as revenue is under AED 3M. Either way the company files by 30 September 2026, and because office rent of AED 1.5M is well above AED 375,000, it must also be VAT registered. If the same flats and offices were owned personally with no licence, the rent would sit outside Corporate Tax, though the office rent would still bring VAT registration.

Should a property company file itself or use an accountant?

A company owning one leased villa can often file itself, but portfolios with commercial units, loans or fair value questions are safer with a firm.

Scope and process are on our Corporate Tax filing service page.

What landlords actually ask us about Corporate Tax