Ajman Property: 7 Corporate Tax Planning Tips for REIT Investors in 2025

REAL ESTATE1 week ago

Ajman’s real estate market, valued at AED 20.5B in 2024 with 26.6% year-on-year growth, is a prime hub for Real Estate Investment Trust (REIT) investors, offering 6–10% ROI and 10–15% appreciation by 2028. Freehold zones like Al Nuaimiya, Al Rashidiya, and Emirates City provide affordable properties (apartments AED 208K–1.15M, villas AED 1M–10M) with high rental yields (9–10% for studios), driven by proximity to Dubai and Sharjah, infrastructure like Sheikh Mohammed Bin Zayed Road, and tourism (237,000 visitors in 2024).

Seven corporate tax planning strategies leveraging zero corporate tax in free zones, utilizing REIT tax exemptions, maximizing VAT recovery, structuring via family partnerships, optimizing transfer fee reductions, ensuring AML compliance, and capitalizing on no capital gains tax enhance REIT profitability. Backed by AED 9B in mid-2024 transactions and policies like 100% foreign ownership, these align with Ajman’s economic vision. This guide details each strategy, eligibility, and impact for REIT investors, supported by 2024–2025 data.

1. Leverage Zero Corporate Tax in Free Zones

Details: Qualifying Free Zone Persons (QFZPs) in Ajman Free Zone or Al Zorah Free Zone enjoy a 0% corporate tax rate on REIT profits, unlike the 9% mainland tax on profits above AED 375K. Ideal for commercial REITs holding properties like Al Nuaimiya offices (AED 1M–5M, rentals AED 50K–150K/year).
Eligibility: REITs must register with Ajman Free Zone Authority, conduct qualifying activities (e.g., property leasing), maintain economic substance (e.g., local staffing), and comply with Federal Tax Authority (FTA) rules. Audited financials required.
Impact on REIT Investors: Saves 9% tax (e.g., AED 90K on AED 1M profit), boosting returns (7–9% in Al Zorah). In 2024, 15% of Ajman’s commercial transactions (AED 1.5B) used free zone structures, driving REIT investments in Emirates City. Attracts HNWIs seeking tax-efficient portfolios.

2. Utilize REIT Corporate Tax Exemptions

Details: Ministerial Decision No. 96 of 2025 exempts qualifying REITs from 9% corporate tax if they distribute 90% of profits and are regulated by the Securities and Commodities Authority (SCA). Applies to REITs holding residential or commercial properties like Ajman Creek Towers (AED 500K–1.15M).
Eligibility: REITs must be SCA-regulated, listed on a UAE exchange (e.g., DFM), distribute 90% of profits, and ensure no single investor owns over 50%. Requires FTA compliance and annual audits.
Impact on REIT Investors: Eliminates 9% tax, enhancing dividend yields (6–8% in Al Nuaimiya). In 2024, REITs accounted for 5% of Ajman’s transactions, with projects like ONE678 Residences attracting passive investors. Boosts appeal for diversified, tax-free income streams.

3. Maximize VAT Recovery on Expenses

Details: REITs can recover input VAT (5%) on expenses like construction, maintenance, or management for residential properties in freehold zones (e.g., Al Rashidiya apartments, AED 208K–397K). Residential leases/sales are VAT-exempt, reducing costs for projects like Ajman Pearl Tower.
Eligibility: REITs with taxable supplies above AED 375K must register with FTA, file quarterly returns, and document expenses. Non-compliance risks penalties (AED 10K–50K). Open to all REITs in freehold zones.
Impact on REIT Investors: Saves 5% on expenses (e.g., AED 25K on AED 500K construction costs), improving net returns. In 2024, 70% of Ajman’s residential leases (AED 2B) were VAT-exempt, boosting REIT profitability in Al Nuaimiya (8–10% ROI). Encourages investment in affordable, high-yield properties.

4. Structure via Family Partnerships for Tax Efficiency

Details: Family Limited Partnerships (FLPs) or LLCs allow REIT investors to hold Ajman properties with tax transparency, avoiding 9% corporate tax. Profits flow to individual partners, leveraging zero personal income tax. Ideal for family-managed REITs holding Al Zorah villas (AED 1M–10M).
Eligibility: Requires 100% family ownership, FTA registration, and audited financials. Properties must be in freehold zones with no mainland commercial activity. Legal setup costs AED 5K–20K.
Impact on REIT Investors: Saves 9% tax (e.g., AED 180K on AED 2M profit), preserving wealth. In 2024, 5% of Ajman’s high-value transactions used family structures, driving demand for Al Rashidiya residences. Enhances estate planning for HNWIs in REITs.

5. Optimize Transfer Fee Reductions

Details: Ajman’s 2% transfer fee (split between buyer and seller) can be reduced via expo discounts (e.g., 50% off at Ajman Real Estate Investment Exhibition 2025) or entity restructuring exemptions (100% owned entities). Applies to properties like Biltmore Residences (AED 500K–2M).
Eligibility: Available in freehold zones like Emirates City. Discounts require Ajman Real Estate Department (ARRA) approval. Restructuring needs proof of ownership. Additional costs include agent commissions (2–5% + 5% VAT) and registration (AED 2K–5K).
Impact on REIT Investors: Saves AED 10K–40K per transaction (e.g., AED 20K on a AED 1M apartment). In 2024, 10% of Al Nuaimiya’s sales (AED 900M) used fee reductions, boosting REIT acquisitions. Encourages portfolio expansion in high-growth areas.

6. Ensure AML Compliance for Tax Benefits

Details: UAE Central Bank AML & CFT Regulations 2024, effective January 2025, mandate KYC and due diligence for REIT transactions, especially cash-based deals in Al Nuaimiya or Al Mowaihat. Compliance ensures access to tax benefits like VAT recovery and free zone exemptions.
Eligibility: Requires ARRA compliance, proof of funds, and bank statements. Costs AED 2K–5K per transaction. Non-compliance risks fines (AED 50K–1M) and loss of tax incentives.
Impact on REIT Investors: Increases costs by 0.5–1% of ROI but secures tax benefits. In 2024, 20% of Ajman’s cash transactions (AED 1.8B) faced AML scrutiny, delaying deals by 1–2 weeks. Ensures trust and stability for REITs in high-value projects like Ajman Uptown.

7. Capitalize on No Capital Gains Tax

Details: No capital gains tax applies to REIT profits from selling properties in freehold zones, e.g., Emirates City apartments (AED 500K–1.5M, 10–15% appreciation by 2028). Corporate REITs face 9% tax unless QFZPs or exempt under Ministerial Decision No. 96.
Eligibility: Available to individual investors or exempt REITs in freehold zones. Sales must be registered with ARRA. No reporting required for individuals.
Impact on REIT Investors: Retains full profits (e.g., AED 150K on a AED 1M apartment with 15% gain), boosting liquidity. In 2024, 35% of off-plan sales (AED 3.2B) leveraged tax-free gains, driving REIT investments in Al Rashidiya. Encourages long-term capital growth.

Market Trends and Outlook for 2025

Yields and Appreciation: REIT-eligible properties offer 6–10% ROI (apartments 8–10%, villas 6–8%) and 10–15% appreciation by 2028, driven by AED 9B in mid-2024 transactions and 20% rental growth in Al Nuaimiya. Off-plan projects like Ajman Creek Towers yield 9–10%.
Tax Environment: Zero personal income, capital gains, and inheritance taxes, plus VAT exemptions and free zone benefits, maximize REIT returns. Ajman’s 2% transfer fee (vs. Dubai’s 4%) enhances affordability.
Infrastructure Impact: Sheikh Mohammed Bin Zayed Road and tourism (237,000 visitors in 2024) boost values by 10–15%. Projects like Al Ameera Village Phase 3 drive demand for REIT-compatible properties.
Investor Drivers: Affordability (30–50% cheaper than Dubai), 100% foreign ownership, and Golden Visas (AED 2M+) fuel 70% of demand. Off-plan sales (60% of 2024 transactions) dominate, with 7,071 deals in mid-2024.
Risks: Oversupply (5,000 units by 2026) and AML costs pose a 10% correction risk in H2 2025. Mitigated by 95% absorption, ARRA oversight, and escrow accounts.
Regulatory Framework: ARRA ensures transparency with 2% transfer fees. Escrow laws protect off-plan investments (e.g., Ajman One Phase 2, handover Q3 2026). Freehold zones allow inheritance rights.

Investment Strategy

Diversification: Invest in Al Nuaimiya apartments (AED 208K–1.15M) for high yields, Al Rashidiya villas (AED 1M–10M) for luxury, or Emirates City commercial units for tax-free profits. Off-plan projects like Sky Gardens Tower offer 10–15% gains by 2026.
Entry Points: Off-plan REIT-eligible properties (e.g., Barajeel Towers, 5–10% down) provide flexible payments. Ready properties (e.g., Al Mowaihat apartments) suit immediate rentals (AED 15K–50K/year).
Tax Optimization: Use Ajman Free Zone for commercial REITs, leverage REIT exemptions, recover VAT, and structure via family partnerships. Negotiate transfer fee reductions and ensure AML compliance via advisors like Adepts Chartered Accountants.
Process: Verify tax benefits via ARRA or Ajman Free Zone. Pay 2% transfer fees and secure NOC. Use platforms like Bayut or AjmanProperties.ae. Required documents: passport copy, proof of funds, no UAE visa needed. Documents must be translated into Arabic and legalized.
Platforms: Contact developers like GJ Properties (info@gjproperties.ae), Aqaar (info@aqaar.com), or brokers like Property Shop Investment (info@psinv.net) for REIT-eligible listings and tax guidance.

Conclusion

In 2025, Ajman’s real estate market, backed by AED 20.5B in 2024 transactions, offers REIT investors seven corporate tax planning strategies—zero corporate tax in free zones, REIT exemptions, VAT recovery, family partnerships, transfer fee reductions, AML compliance, and no capital gains tax. With 6–10% ROI and 10–15% appreciation, projects like Ajman Creek Towers and Biltmore Residences attract investors in freehold zones. Despite a 10% correction risk, 95% absorption and ARRA oversight ensure stability. Ajman Property