UAE Corporate Tax for Individuals and Self-Employed Residents

Single individuals or self-employed residents who own and operate their businesses, such as consultants, freelancers, and property brokers, now have an additional year before they must file for corporate tax in the UAE. However, there are still some important details they need to consider well in advance.

The UAE Ministry of Finance recently clarified the deadlines for tax registrations for businesses, including those run by 'natural persons' or individuals. While traditional businesses must register based on the date of their company's license, individuals have until March 31, 2025, to ensure they are fully compliant with corporate tax regulations.

For single individuals, they come under corporate tax rules if their annual turnover exceeds Dh1 million. It's crucial for these individuals to sign up for corporate tax registration, regardless of whether their income is Dh200,000 or Dh1 million. This is because even if they don't file for corporate tax immediately, they must do so before March 31, 2025.

Individuals who work as employees in the UAE but also take on freelance projects approved by their organizations should also prepare for corporate tax registration. For example, if someone works as a property or IT consultant and earns income from these activities, they fall under the corporate tax framework.

Business or Business Activities of a natural person that are subject to Corporate Tax

Business or business activities conducted by a natural person in the UAE are subject to corporate tax if the total turnover exceeds AED 1 million within a calendar year. Turnover refers to the gross amount of income earned during the year before any costs are deducted. It's essential to register for corporate tax purposes if these criteria are met.

When is a natural person not subject to Corporate Tax and thus not required to register for Corporate Tax?

There are certain types of income that are not considered part of business activities and are exempt from corporate tax. These include wages, personal investment income, and real estate investment income.

If a natural person earns income solely from these sources and does not conduct any business activities in the UAE, they do not need to register for corporate tax.

In conclusion, single individuals running businesses in the UAE need to be aware of their obligations regarding corporate tax registration. While they have until March 31, 2025, to register, it's advisable to do so sooner rather than later to ensure compliance with the law. Consulting with experts like WESETUPBUSINESS in business setup and taxation can help individuals navigate these regulations effectively.