[World Tax News] UAE Clarifies Real Estate Valuation Rules and More

Editorial Team – [2025] 179 Taxmann.com 694 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. UAE clarifies valuation rules for real estate developers under transitional provisions

The UAE Federal Tax Authority (FTA) has issued Public Clarification CTP009 on the application of the valuation method under the transitional rules prescribed in Ministerial Decision No. 120 of 2023 for the disposal of qualifying immovable property by taxable real estate developers.

Under the transitional rules, where gains or losses on assets or liabilities held before the first tax period are recognised after the start of that period, adjustments may be made to exclude the portion attributable to the pre-Corporate Tax period.

Article 2 of the Ministerial Decision allows a taxable person to elect (in its first tax return) to exclude pre-Corporate Tax gains arising from the disposal or deemed disposal of qualifying immovable property. The election is irrevocable except in exceptional cases approved by the FTA. Two computation methods are provided – valuation and time apportionment, with this clarification focusing on the valuation method.

The valuation method applies to developers recognising revenue from off-plan projects under IFRS 15 or equivalent standards. Qualifying immovable property may refer to an entire project or individual units, depending on how revenue is recognised. “Disposal” or “deemed disposal” follows accounting principles, e.g., revenue recognised based on percentage of completion is considered a disposal.

Under Article 2(2)(a), the excluded gain equals the difference between the property’s market value at the start of the first tax period and the higher of its original cost or net book value at that time. Market value must be determined by a competent UAE authority or accredited valuer and adjusted to exclude portions not forming part of the qualifying property.

Computation Steps:

• Determine the excluded gain by deducting the higher of cost or net book value from the (adjusted) market value.
• Apportion the excluded gain to each tax period based on revenue recognition (e.g., percentage of completion).
• Identify the accounting profit attributable to the property. If this shows a loss, no adjustment applies.
• Adjust the profit by the apportioned excluded gain (up to the profit amount); any excess excluded gain lapses.

Source – Corporate Tax Public Clarification

2. Morocco presents Draft Finance Bill 2026, proposing major tax reforms

On 20 October 2025, the Moroccan government presented the draft Finance Bill for 2026 to Parliament. The proposal introduces several key tax measures summarised below:

(a) Corporate Income Tax

• Expansion of withholding at source – The scope is extended to include fees paid by:

1. 1. banks and similar financial institutions,
   2. insurance and reinsurance companies, and
   3. companies with an annual turnover of at least MAD 50 million. The amounts withheld will remain creditable to the payee.

• Clarification on tax benefits for sports joint-stock companies – The five-year corporate tax exemption period will begin from the company’s first taxable transaction.

(b) Personal Income Tax and Withholding Tax

• Broadened 5% withholding on rental income – Now applicable to payments made by corporate taxpayers and self-employed individuals under the professional income regime, in addition to public entities.
• Temporary income abatements for sports professionals – Taxable employment income of professional athletes, coaches, and technical staff will benefit from progressive abatements, i.e., 90% in 2026, 80% in 2027, 70% in 2028, and 60% in 2029.
• Updated reporting for investment income and capital gains – Tax on disposals of securities not held in an account will be payable within 30 days of each sale, accompanied by an annual summary. Additionally, investment income from foreign sources must now be declared.

(c) Value Added Tax (VAT)

• Extended import VAT exemption – Now includes fertilising materials and growing media as defined under Law 53-18, ensuring alignment with domestic VAT treatment across the supply chain.
• Extended VAT-exempt acquisition period – A uniform 24-month window is introduced for VAT-exempt imports and domestic acquisitions related to projects under construction or covered by an investment agreement with the State.
• Prolonged VAT exemption for sports joint-stock companies – The exemption without credit is extended through 2030.
• New self-assessment mechanism – Industrial purchasers must self-assess VAT on new industrial waste and recovered materials to enhance traceability and reduce informal market activity.

Subject to parliamentary approval, these provisions will generally take effect from 1 January 2026.

Source – Draft Finance Bill

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