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Is UAE Corporate Tax Applies to Individual / Natural Person Income?


Answer is Yes

if an individual satisfies the below conditions, then Individual income is taxable under UAE Corporate tax.

  • (i) he/she is a Non-Resident Person with a Permanent Establishment in the UAE;
  • (ii) he/she carries on a Business or Business Activity.
  • (iii) In respect of which he /she derives a total Turnover in excess of AED1 million; and

The turnover is not derived from:

  1. Wages
  2. Personal investment, or
  3. Real Estate Investment.

Wage Includes

The Wage that is given to the employee in consideration of their services under the employment contract, whether in cash or in-kind, payable annually, monthly, weekly, daily, hourly, or by piece-meal, and includes all allowances and bonuses in addition to any other benefits provided for, in the employment contract or in accordance with the applicable legislation in the UAE.

Personal Investment includes

Investment activity that a natural person conducts for their personal account that is neither conducted through a License or requiring a License from a Licensing Authority in the UAE, nor considered as a commercial business in accordance with the Federal Decree-Law No. 50 of 2022.

Real Estate Investment includes:

 Any investment activity conducted by a natural person related to, directly or indirectly, the sale, leasing, sub-leasing, and renting of land or real estate property in the UAE that is not conducted, or does not require to be conducted through a License from a Licensing Authority.

Additional Views

  • Individual who will fall within the scope of Corporate Tax and thus be required to register for Corporate Tax purposes.
  • A natural person would only be subject to Corporate Tax insofar as he/she conducts a Business or Business Activity in the UAE. This includes sole establishments and individual partners in Unincorporated Partnerships that conduct a Business or Business Activity in the UAE.
  • For minors or incapacitated individuals the natural person’s corporate tax obligations shall be fulfilled by their legal Representative.
  • Natural persons conducting Business or Business Activities in the UAE are Resident Persons for Corporate Tax irrespective of their nationality, whether they hold a residency visa in the UAE, whether their income is sourced in the UAE or from abroad, or how much time they may physically spend in the UAE.
  • Permanent Establishment in the UAE by virtue of a fixed place through which he/she carries on business in the UAE, will be treated as a resident person for UAE corporate tax purposes.
  • If a nature person conducts a business or business activity in the UAE and his/her total turnover does not exceed AED 1 million in a Gregorian calendar year, he /she will not be subject to corporate tax, hence the natural person would not need to register for corporate tax.
  • The natural person is not required to register on the basis that the selling of her personal assets is not a Business Activity,
  • A nature person’s registration obligations for corporate tax start as soon as his / her total turnover exceeds the AED 1 million threshold. The natural person can subsequently elect to apply small business relief in the relevant tax period, where the relevant conditions are met.
  • The Gregorian calendar year runs from 1 January until 31 December.
  • Tax Registration information and documentation requirements :Contact details: telephone number ,physical address and email address, Passport(a copy the photo page to be uploaded with the application), Emirates ID (a copy of the front and back of the Emirates ID to be uploaded with the application ), Sole establishment  details and License details  in relation to the Business Activities conducted, if any (a copy of each to be uploaded with the application),Value Added Tax or  Excise Tax registration details (with an attachment, if any)
  • Natural persons who are not subject to Value Added Tax, or Excise Tax but are within the scope of the Corporate Tax will be required to register for Corporate Tax purposes.
  • Obligations once registered: Will be subject to a number of administrative Corporate Tax obligations, these include: Filling a Tax Return and paying  any Corporate Tax due within 9 months of the end of their Tax Period, Retaining all  records  and documents of 7 years following the end of the Tax period, Ensuring  that all of his/her registration details are up to date and informing the FTA of any changes within 20 business days, otherwise penalties may arise
  • A Natural person will only have one Tax Registration Number for Corporate tax for all his/her Business and business activites.
  • A natural person should only deregister for corporate Tax if he/she has ceased conducting all business activities. This application must be made within 3 months of the date of cessation of the business or business Activity.
  • If the natural person’s total Turnover falls under the AE$D 1 million threshold within a Gregorian calendar year. Instead, he/she will retain his/her tax Registration status. However, a natural person who remains registered whilst his/her total Turnover is under the AED 1 million threshold will only be required to file a ‘nil’ tax return.

Source: CTGTNP1 – Taxation of Natural Persons under the Corporate Tax Law