Most owners letting a Dubai apartment assume corporate tax is a company problem. For a lot of them that is right. But the Federal Tax Authority does not draw the line where owners expect it — it draws it at whether the activity is carried on under a licence, not at how much rent comes in.
That distinction decides whether your rental income is inside the tax at all. It is worth ten minutes of reading before it decides itself.
The line the FTA actually draws
The FTA's Corporate Tax Guide on Real Estate Investment for natural persons (CTGREI1) sets out the test. Where a natural person earns rental income without a Licence, and without being required to hold one for that activity, the income is treated as Real Estate Investment income — and Real Estate Investment income is excluded from the scope of Corporate Tax.
The guide's own example is a natural person who owns a UAE property leased to a third-party commercial company for a fixed annual rent, holding no licence and needing none. That rental income is Real Estate Investment income and falls outside Corporate Tax.
Now the other side. The guide gives the case of a natural person who owns several properties in Abu Dhabi and Dubai and creates a sole establishment holding a Licence to manage his own properties. A sole establishment has no separate legal personality from the person — so this is still the same individual. But because the activity is now carried on under a Licence, the guide is explicit: the rental income is not classified as Real Estate Investment income, and is subject to Corporate Tax if the AED 1,000,000 turnover threshold is exceeded within the Gregorian calendar year.
Same apartments. Same rent. Different answer, because of the licence.
Where holiday homes sit, and why owners should look closely
This is the part that matters for anyone letting short or mid-term, because that activity involves permits and, above a certain scale, licences in a way that an annual tenancy does not.
The FTA guide addresses it directly. Its Example 11 describes a natural person whose apartments are rented as holiday homes under a licensed real estate sole establishment. In that example the person has registered for Corporate Tax, and was not eligible for Small Business Relief because turnover exceeded AED 3,000,000 in a Gregorian calendar year, so Corporate Tax is paid on the taxable income of the business.
The guide uses that as an illustration of how jointly-owned property is assessed, not as a general ruling that all holiday-home income is taxable. But the framing is the point: the FTA's own worked example of licensed holiday-home letting sits inside Corporate Tax, not outside it.
What we are not going to tell you is where your own arrangement falls. Whether you require a licence for what you are doing, whether a permit held in your name amounts to one, and whether letting through a licensed operator changes your position — those turn on facts specific to you, and the FTA is the authority on them, not us and not a management company. If you let short-term at any scale, that is a question for a tax adviser or the FTA directly, and it is worth asking before a tax period closes rather than after.
The numbers that go with it
Three thresholds appear in the FTA material and they do different jobs. Owners routinely blend them into one.
AED 1,000,000 turnover is the point at which a natural person's business turnover brings them within Corporate Tax in a Gregorian calendar year. Below it, a natural person is not subject to Corporate Tax on business income.
AED 375,000 taxable income is the point above which the 9% rate applies. Taxable income up to that figure is taxed at 0%.
AED 3,000,000 revenue is the Small Business Relief ceiling. The FTA's published example makes the mechanism clear: a person with revenue of AED 1,900,000 in the tax period ending 31 December 2026 was still not eligible for the relief, because revenue in the prior period ending 31 December 2025 had been AED 4,300,000. The test looks backwards as well as at the current period.
Turnover, taxable income and revenue are not the same measure, and the thresholds are not alternatives to each other. Reading "I earn less than AED 375,000 so I am fine" off the middle number is the most common way to get this wrong.
VAT is a separate question with its own line
Corporate tax and VAT are different taxes with different triggers, and short-term letting can reach the VAT one first.
VAT registration is mandatory once taxable supplies exceed AED 375,000 in a rolling twelve months, and voluntary registration is available from AED 187,500 of taxable supplies, imports or taxable expenses. Those are the FTA's own registration thresholds.
The coincidence of AED 375,000 appearing in both taxes — as a VAT registration threshold and as the corporate tax 0% band — is a genuine trap. They measure different things and neither tells you anything about the other.
What to actually do
Establish first whether your letting is carried on under a licence, or requires one. That single fact does more to decide your corporate tax position than the size of your rent roll.
Then check the turnover figure against the calendar year, not against your own financial year, and check the prior period too if you are relying on Small Business Relief.
Then confirm it with the FTA or a tax adviser in writing. Rental income, licences and permits interact in ways that general guidance cannot resolve for an individual case, and the cost of getting it wrong lands on you rather than on whoever told you it was fine.
Sources, checked 2 August 2026
- Real Estate Investment income, the licence test, the AED 1,000,000 turnover threshold and the licensed holiday-home example — Federal Tax Authority, Corporate Tax Guide | Real Estate Investment | CTGREI1, tax.gov.ae.
- Small Business Relief, the AED 3,000,000 revenue threshold and the prior-period test — Federal Tax Authority, Corporate Tax Topics, tax.gov.ae.
- The 9% rate above AED 375,000 taxable income — Federal Tax Authority, tax.gov.ae.
- VAT registration thresholds (AED 375,000 mandatory, AED 187,500 voluntary) — Federal Tax Authority, VAT Registration, tax.gov.ae.
Tax rules change and individual circumstances decide the outcome. Confirm your own position with the Federal Tax Authority or a tax adviser before acting on it.
Solayra Holiday Homes Management runs short and mid-term letting for owners and investors across some of Dubai’s most sought-after areas — including Dubai Marina, JBR, Downtown, DIFC, and Dubai Creek Beach. Every apartment is DTCM registered and priced against extensive market data, and you see the occupancy and every dirham as it earns. See what your apartment could be doing on the Market Gauge, read what we do for owners, investors, investment companies and agents & partners, or write to us at owners@solayra.com.
