Yes, foreign companies can register land or property in Dubai, but there are specific regulations and conditions that govern such transactions. The Dubai real estate market is structured to encourage foreign investment, and the legal framework allows foreign entities to own property in designated areas.

Key Points:

1. Freehold Areas:

   • Designated Zones: Foreign companies can purchase and register property in Dubai's designated freehold areas. These areas include popular locations like Dubai Marina, Palm Jumeirah, Downtown Dubai, Business Bay, and Jumeirah Lakes Towers (JLT). In these zones, foreign companies can enjoy full ownership rights, including the right to buy, sell, lease, and inherit property.
     
     

   • Ownership Structure: Properties in freehold areas can be registered under the foreign company's name, providing flexibility and control over the asset.
     
     

2. Offshore Companies:

   • JAFZA Companies: Companies registered in the Jebel Ali Free Zone (JAFZA) are allowed to own property in freehold areas. This is a popular option for foreign investors as it offers tax benefits and full repatriation of profits.
     
     

   • RAKEZ and Other Free Zones: Similarly, companies registered in other free zones like the Ras Al Khaimah Economic Zone (RAKEZ) can also own property in designated areas of Dubai.
     
     

3. Leasehold Options:

   • Leasehold Areas: In addition to freehold ownership, foreign companies can also enter into long-term leases (up to 99 years) in leasehold areas. These arrangements allow the company to use the property for an extended period without full ownership, which can be beneficial for certain business models.
     
     

4. Registration Process:

   • Dubai Land Department (DLD): The property must be registered with the Dubai Land Department. The registration process involves submitting the necessary documentation, including the company's registration certificate, board resolution, and power of attorney, along with proof of payment for the property.
     
     

   • Escrow Account: For off-plan properties, payments are typically made into an escrow account managed by the DLD, ensuring that funds are used exclusively for the construction of the property.
     
     

Legal and Tax Considerations:

When it comes to commercial rent in Dubai, several legal and tax considerations are important for both landlords and tenants to understand:

1. Mandatory VAT Registration:

   • Landlords who generate an annual rental income exceeding AED 375,000 are required by law to register for VAT with the Federal Tax Authority (FTA). Failure to register can result in significant fines and legal penalties. Registered landlords must charge VAT on all commercial rent and file regular VAT returns.
     
     

2. VAT-Compliant Invoices:

   • Landlords must issue VAT-compliant invoices to their tenants. These invoices should clearly state the amount of rent due, the 5% VAT applied, and the total amount payable. This transparency ensures that the tenant is fully aware of the VAT being charged and its implications.
     
     

3. Tax Deductions:

   • Businesses that lease commercial properties can often reclaim the VAT paid on rent as part of their input tax, provided they are VAT-registered and the property is used for taxable business activities. This makes the VAT system neutral for businesses in many cases, as they can offset VAT on rent against the VAT they charge on their own services or goods.
     
     

4. Lease Agreements:

   • It’s crucial for lease agreements to specify the treatment of VAT on rent. The agreement should clearly outline whether the rent quoted is inclusive or exclusive of VAT, and detail the responsibilities of both parties regarding VAT payment and compliance.
     
     

5. Penalties for Non-Compliance:

   • Non-compliance with VAT regulations, such as failing to charge VAT on commercial rent or not issuing proper invoices, can result in penalties. These penalties may include fines or legal action by the FTA. Both landlords and tenants should ensure they are fully compliant to avoid these issues.
     
     

6. Implications for Tenants:

   • Tenants must account for the additional 5% VAT in their financial planning. While this is an added cost, VAT-registered businesses can often recover this amount, making it less of a financial burden.
     
     

Market Impact:

The introduction of VAT on commercial rent has been well-integrated into Dubai’s real estate market, with most businesses and investors accustomed to the additional tax. The competitive nature of Dubai’s commercial real estate sector means that VAT has not significantly deterred investment or leasing activity, but it does require careful consideration in financial planning.