UAE Corporate Tax Applies to Individuals Income

Is UAE CT Applies to Individual (Natural Person) income the answer is “ No “ but also “ Yes ”for some cases.

Natural person Refer to an Individual of any age (including minor) whether resident in UAE or Other places.

Below Individual UAE Income CT not Applies

• Salary & Wages
• Any Other employment income i.e. OT, Gratuity, Leave Salary, etc.,
• Director fees
• Director remuneration
• Interest on bank deposits
• Any other income earned from the savings scheme
• Dividend income on shares
• Capital Gains on shares
• Personal investment income
• Personal Real estate income (sale, leasing, sub-lease, renting of land Rental, Lease, capital gains, etc.,) in UAE
• Profit on sale of personal car etc.,
• Lottery winning income
• Game show prizes

Below Individual UAE Income CT Applies

• Individual (whether resident or nonresident) subject to UAE CT if conducts a Business or Business activity in the UAE and total revenue exceeds AED 1 million within a Gregorian calendar year.

• Personal investment income is subject to CT when investment activity conducted in their personal capacity that is conducted through a license or requiring a license from a licensing authority total revenue exceeds AED 1 million within a Gregorian calendar year.

• Real estate investment income is subject to corporate tax when derived by a natural person in UAE that is through a license or required a license from a licensing authority (Real estate income includes the sale, leasing, sub-lease, renting of land Rental, Lease, capital gains, etc.,) total revenue exceeds AED 1 million within a Gregorian calendar year.
• Only income derived from a business or business activity conducted in the UAE by Individual person is subject to CT.

• Freelancers have to pay CT in UAE: In accordance with the UAE’s Corporate Tax Regulations, any taxable earnings surpassing AED 375,000 will be liable for Corporate Tax. This taxation framework extends to freelancers and self-employed independent contractors in the UAE once their income exceeds the AED 375,000 threshold.

Additional Explanations

• Business: Any activity conducted regularly, on an ongoing and independent basis by any Person and in any location, such as industrial, commercial, agricultural, vocational, professional, service or excavation activities or any other activity related to the use of tangible or intangible properties
• Business Activity: Any transaction or activity, or series of transactions or series of activities conducted by a Person in the course of its Business
• Individual Turnover from Business or Business Activities conducted in the UAE exceeds AED 1 million within a Gregorian calendar year, the natural person (whether resident or non-resident) is required to comply with the obligations of the Corporate Tax Law, including registration for Corporate Tax purposes with the FTA, submitting Corporate Tax Returns and paying Corporate Tax
• Individual person citizenship or residency visa is not the criterion for CT purposes.
• Double Taxation Avoidance Agreement (DTAA) applies to Individual
• To conduct Business in the UAE, a License may be required. The nature of the economic activity defines the type of License required. In general, there are different types of Licenses, including industrial, commercial, crafts, tourism, agricultural, and professional. However, in addition to these Licenses, other types of Licenses may be issued by Local Governments, for example, a freelance License.
• Tax Registration: Natural persons conducting Businesses or Business Activities in the UAE that are subject to Corporate Tax are only required to register for Corporate Tax purposes once the total Turnover derived from such Businesses or Business Activities exceeds AED 1 million within a Gregorian calendar year 41. When a natural person who has registered for Corporate Tax with the FTA finds their Turnover not exceeding the AED 1 million threshold during any subsequent Gregorian calendar year, they will retain their Tax Registration status.
• Tax Return will be due in line with ordinary time limits (9 months from the end of the Tax Period)
• Tax Period: The Tax Period for a natural person who conducts Business or Business Activity that is subject to Corporate Tax, shall be the Gregorian calendar year. The Gregorian calendar year runs from 1 January until 31 December
• Natural persons should submit a single Tax Return for all their Businesses and Business Activities subject to Corporate Tax.
• Sole proprietorship: the sole proprietorship and the natural person are one and the same because of their direct relationship and Control over the Business and their unlimited liability for the debts and other obligations of the Business
• Unincorporated Partnerships: Unincorporated Partnership is taxed at the level of the Unincorporated Partnership instead of at the level of the partners.

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Source & References