On 26 September 2025, the Ministry of Finances of the UAE issued a corporate tax public clarification on the application of the valuation method under the transitional rules as set out in Ministerial Decision No. 120/2023 on the Adjustments Under the Transitional Rules for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations. Transitional provisions bridge the gap between pre- and post-CIT periods, ensuring fairness for investors regarding gains accumulated before CIT implementation.
This last-minute clarification, released just days before the 30 September 2025 corporate tax return filing deadline, provides essential guidance for real estate developers subject to UAE Corporate Tax. It explains how to apply the transitional rules when disposing of “Qualifying Immovable Property” (such as land or buildings) that was owned before the start of their first Tax Period, especially for off-plan developments where revenue is recognised progressively under IFRS 15 or equivalent standards for SMEs.
In this Alert, our Tax Partner, Olivier Remacle, and our Tax Principal, Barbara Schwartz, highlight the guidance provided by the public clarification, helping real estate developers to correctly apply the transitional rules and avoid overpaying tax on historical gains.