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Corporate Tax

corporate tax for natural persons
Corporate Tax

When Do Natural Persons Need to Register for Corporate Tax in the UAE?

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The launch of the UAE’s Corporate Tax (CT) regime in June 2023 has raised important questions for individuals about their tax obligations. While it is clear that corporate entities are subject to the tax, natural persons—such as freelancers, sole proprietors, and investors—may also be required to register, depending on their income and activities. This article explains the specific conditions under which a natural person must register for Corporate Tax in the UAE, with a focus on key income thresholds, exemptions, and compliance obligations. Who Is Considered a Taxable Natural Person? According to the UAE Corporate Tax Law, a natural person (i.e., an individual) may be subject to Corporate Tax if they: Exempt Income for Natural Persons Includes: When Does a Natural Person Need to Register? A natural person is required to register for Corporate Tax in the UAE only if their total annual business turnover exceeds AED 1 million within a calendar year. This threshold applies exclusively to income earned from business or commercial activities, not from exempt sources such as salaries or personal investments. For example, freelancers and sole proprietors who generate over AED 1 million annually through services like consulting, content creation, or design must register for Corporate Tax. Similarly, licensed business owners—such as individuals operating a retail shop, café, or online business—are also required to register if their turnover surpasses the threshold. In cases where an individual has mixed sources of income, such as a combination of a salaried job and freelance work, only the income from the business activity is considered when determining whether registration is necessary. If the business portion alone exceeds AED 1 million in a year, the individual must register, even though their salary remains exempt from Corporate Tax. When Is Registration Not Required? Registration for Corporate Tax is not required for natural persons in several common situations. Salaried employees are fully exempt, as employment income does not fall within the scope of Corporate Tax. Likewise, individuals who earn income from passive real estate investments—such as renting or selling property without holding a business license—are not required to register. Additionally, small-scale traders or freelancers whose total annual business income remains below the AED 1 million threshold are exempt from registration requirements. Special Consideration: Real Estate Income Real estate income is generally exempt from Corporate Tax for natural persons when it arises from passive activities, such as renting out property for personal investment purposes. This means that individuals who own and lease out residential or commercial properties without engaging in a licensed real estate business are not required to register for Corporate Tax, even if their rental income exceeds AED 1 million annually. However, the exemption does not apply if the individual holds a business license related to real estate—such as a broker, developer, or property manager—or if the income stems from a commercial real estate activity. In such cases, the person is considered to be conducting a business, which brings the income within the scope of Corporate Tax. For example, renting out a personal villa would typically remain tax-exempt, unless it forms part of a licensed real estate business. How to Register for Corporate Tax If you meet the criteria, registration should be completed through the Federal Tax Authority (FTA)’s EmaraTax portal. Steps include: Important: Registration must be completed before the end of the relevant tax period to avoid penalties. Do You Need to Register? Natural persons are not required to register for Corporate Tax if their income comes solely from wages, passive investments, or exempt real estate activities. However, registration becomes mandatory if an individual earns business income exceeding AED 1 million per year, excluding any exempt income categories. If there is any uncertainty about your tax status or whether registration is necessary, it is strongly recommended to consult a qualified tax advisor to ensure compliance with UAE tax laws. Need Help Navigating Corporate Tax? Whether you’re a freelancer, investor, or property owner in the UAE, Maats Auditors & Consultants can help you understand your obligations and ensure full compliance with the Corporate Tax law. Contact us today for expert guidance on registration, filing, and staying tax-efficient in the UAE.

Corporate Tax

UAE to waive late registration Penalties Under Corporate Tax Law

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MoF and FTA Introduced Corporate Tax Penalty Waiver Initiative to Boost Compliance As per the press release in the UAE, the Ministry of Finance (MoF) and the Federal Tax Authority (FTA) have announced a new Cabinet Decision that waives administrative penalties for corporate taxpayers and certain exempt persons who missed the deadline for tax registration. This initiative is part of the government’s proactive approach to encourage compliance while easing the financial burden on businesses, particularly during the first year of corporate tax implementation. Key Details of the Initiative To benefit from the penalty waiver, eligible taxpayers must: Additionally, the FTA has confirmed that administrative fines already paid by qualifying entities will be refunded, further incentivizing timely compliance. Why This Decision Matters The UAE’s corporate tax regime is still in its early stages, and this initiative reflects the government’s commitment to: By offering this waiver, authorities aim to minimize challenges for companies adapting to the new tax system while reinforcing the importance of adherence to regulatory deadlines. A Step Toward a Stronger Tax Ecosystem This decision aligns with the UAE’s broader strategy to enhance tax compliance without imposing undue pressure on businesses. It also demonstrates the government’s willingness to listen to market needs and adjust policies to ensure a smooth transition into the corporate tax framework. For eligible businesses, this is an opportunity to rectify past delays without penalties, ensuring they remain in good standing with the FTA. Looking Ahead As the UAE continues refining its tax system, businesses should stay informed about regulatory updates and deadlines. Proactive compliance not only avoids penalties but also contributes to a more transparent and efficient economic environment.

first tax period of juridical persons
Corporate Tax

First Tax Period Of a Juridical Person

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The Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Business applies to Tax Periods commencing on or after 1 June 2023. 1 .First tax period of Juridical persons established under the Commercial Companies Law Application to the Federal Tax Authority to change the Tax Period is not required if the first Financial Year of a newly incorporated company formed under Commercial Companies Law or other legislation like Free Zone regulations starts from its date of incorporation, if it is not less than 6 months and not more than 18 months. Application to the Federal Tax Authority is required if a Taxable Person wants to change the start and end date of its Tax Period, or use a different Tax Period, subject to certain conditions, provided that the Tax Period is not extended to more than 18 months, nor reduced to less than 6 months. This can broadly lead to one of three scenarios for a newly incorporated company under the Commercial Companies Law: its first Financial Year is a 12-month period, or its first Financial Year is a period between 6 and 12 months, or its first Financial Year is a period between 12 and 18 months In all the above scenarios, where the first Financial Year commences on or after 1 June 2023, this will be the first Tax Period under the Corporate Tax Law. Where the first Tax Period is longer or shorter than a 12-month period, there is no pro-rating of the various thresholds prescribed under the Corporate Tax Law, for example the Revenue threshold for Small Business Relief. The only exception is the de minimis threshold for the purposes of the General Interest Deduction Limitation Rule (currently set at AED 12 million). 2. First tax period of Non-Resident Person with a Permanent Establishment in the UAE Where a Non-Resident Person has a Permanent Establishment existed at 1 June 2023, the first Tax Period will be its first 12-month Financial Year commencing on or after 1 June 2023. However, the first Tax Period of such Person cannot be less than 6 months or more than 18 months. The first Tax Period of the Permanent Establishment of the Non-Resident would be as above, despite the following principles which apply in relation to when a Permanent Establishment is recognized as such for Corporate Tax purposes: Where the Permanent Establishment exists by virtue of a fixed place of Business in the UAE, then for Corporate Tax purposes, such Permanent Establishment would only be treated as having come into existence once it has been operational for six months from the start of Corporate Tax, subject to the provisions of any applicable Double Taxation Agreement. Thus, such Permanent Establishment would only be considered as existing on 1 December 2023 (because six months have passed to indicate permanence), but with effect from 1 June 2023 subject to the provisions of any applicable Double Taxation Agreement. Alternatively, where the Permanent Establishment exists by virtue of a Person habitually exercising an authority to conduct Business or Business Activity on behalf of the Non-Resident Person (dependent agent situation), then the Permanent Establishment is considered to exist on 1 June 2023 (i.e. because it was operational when Corporate Tax was implemented). 3. First Tax Period of a Resident Person with effective management and control in the UAE Where a juridical person is incorporated or otherwise established or recognized under the applicable legislation of a foreign jurisdiction but is a Resident Person by virtue of being effectively managed and controlled in the UAE, the first Tax Period will be the Financial Year or part thereof, commencing on or after 1 June 2023. Cessation before or during First Tax Period The cessation of a Taxable Person’s Business or Business Activities, whether by dissolution, liquidation, or otherwise, during its first Tax Period does not impact its obligation to register for Corporate Tax, i.e. a Taxable Person is still required to register for Corporate Tax even where the cessation takes place after the start of the first Tax Period. The expiry of a License or the lack of a valid License does not, by itself, constitute cessation of Business In such cases, a Taxable Person is still required to submit a Tax Deregistration application within the deadline of 3 months from the Deregistration triggering event. Timelines to apply for Tax Deregistration where the Person ceases Business before or during the first Tax Period Where a Taxable Person ceases their Business Activities during the first Tax Period, their first Tax Period will come to an end on the cessation date. Such a Person should deregister within the timeline prescribed, that is within 3 months from the date of cessation. A taxable Person must be registered before filing Tax Deregistration application and must ensure that they have registered in time, to allow for sufficient time to comply with the deadline for Tax deregistration. Failure to do so can result in administrative penalties.  

corporate tax in UAE for natural persons
Corporate Tax

Corporate Tax In UAE For Natural Persons

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The provisions of the Corporate Tax Law shall apply to Tax Periods commencing on or after 1 June 2023.  Where a juridical person has more than one License, the License with the earliest issuance date shall be used. Resident Person • Non-Resident Person with a Permanent Establishment in the UAE • Business Activity deriving a total Turnover in excess of AED 1 million ( Excludes turnover derived from Wage, Personal Investment, Real Estate Investment ) Scope of Tax A natural person can be either a Resident Person or a Non-Resident Person. natural person residing in the UAE and conducts Business  in the UAE, is considered to be a Resident Person and, therefore, a Taxable Person for Corporate Tax purposes. When a natural person resides outside the UAE, that is having a home in another country, becomes a Resident Person for Corporate Tax purposes if conducts Business or Business Activities in the UAE On the other hand, in general terms, where a natural person is considered a Non- Resident Person, such natural person would only be subject to tax from their Business or Business Activities conducted within the UAE Residence for Corporate Tax purposes is not determined by physical residence in the UAE, whether by virtue of citizenship or a residency visa. Implication of Double Taxation Agreement If the natural person has not invoked the application of a Double Taxation Agreement, any natural person conducting Business in the UAE will be a Resident Person for purposes of the Corporate Tax Law. By implication, in the absence of a Double Taxation Agreement, a natural person who has a Permanent Establishment in the UAE by virtue of a fixed place through which carries on Business in the UAE, will be treated as a Resident Person for UAE Corporate Tax purposes. Where a natural person resides in a country that has an applicable Double Taxation Agreement with the UAE, and as a result of the application of that Double Taxation Agreement the natural person is not resident in the UAE but has a Permanent Establishment in the UAE, he/she will be a Non-Resident Person and taxable in the UAE in relation to his/her Permanent Establishment. Where no Double Taxation Agreement is applicable to the position of the natural person, a natural person cannot be a Non- Resident with a Permanent Establishment in the UAE. Instead, he/she would be considered as a Resident Person Turnover Business or Business Activities conducted by a natural person in the UAE are subject to Corporate Tax if the total Turnover from such Business exceeds AED 1 million within a calendar year. Total Turnover is the sum of all the income before any costs are deducted. Exclusions from Corporate Tax For a natural person, income from the following categories is not considered as arising from Business and is disregarded when determining the total Turnover and not subject to Corporate Tax, regardless of the amount: 1.Wage  Wage, received from the employer is not subject to Corporate Tax. Thus, salary or other form of remuneration received by a natural person as an employee from employer would not fall within the scope of Corporate Tax. 2.Personal Investment income Personal Investment income is not subject to Corporate Tax when derived by a natural person from investment activity conducted in personal capacity that is neither conducted through a Licence or requiring a Licence from a Licensing Authority, nor considered as a commercial business 3.Real Estate Investment income Real Estate Investment income is not subject to Corporate Tax when derived by a natural person if it is related to the selling, leasing, sub-leasing, and renting of land or real estate property in the UAE that is not conducted through a Licence nor requiring a Licence from a Licensing Authority.  Calculation of Turnover  A natural person’s registration obligations for Corporate Tax start as soon as the 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.  Tax Period  The Tax Period of a natural person who conducts a Business or Business Activity that is subject to Corporate Tax, shall be from 1 January until 31 December. The first potential Tax Period for a natural person is the 2024 Gregorian calendar year.  The Tax Registration process for Corporate Tax An application to register for Corporate Tax can be made on the EmaraTax portal. A natural person who is already registered for Value Added Tax or Excise Tax can use their existing login details. A natural person that has not previously registered with the FTA will be required to create new login credentials the first time he/she accesses the EmaraTax portal. Key information and documentation requirements for Tax Registration purposes A natural person who is required to register for Corporate Tax must submit a registration application along with the relevant supporting documentation to the FTA. Contact details – telephone number, physical address and email address Passport (a copy of 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 Licence details in relation to the Business and Business Activities conducted, if any (a copy of each to be uploaded with the application) Value Added Tax, or Excise Tax registration details ( Not Mandatory) Bank account details (Not Mandatory) Once registered, he/she will be issued with a separate Tax Registration Number for Corporate Tax purposes. This Tax Registration Number will be similar to their existing Tax Registration Number for Value Added Tax and/or Excise Tax, but the last digit will be different from their Tax Registration Number(s) for Value Added Tax and/or Excise Tax. Persons not registered for Value Added Tax and Excise Tax 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 after

corporate tax update 2024 UAE, corporate tax 2024 penalty, Maats accountants
Corporate Tax

Timeline for Submitting Corporate Tax Registration Application For Business In UAE

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Timeline for Submitting Corporate Tax registration application for business in the UAE All Taxable Person shall apply for Corporate Tax Registration in accordance with the timelines prescribed by the federal tax authority which are as follows. Timeline for Resident Juridical Persons (Existing licensees incorporated before 01st March 2024) Date of issue of License Deadline for submitting CT application 1 January – 31 January 31-May-2024 1 February – 28/29 February 31-May-2024 1 March – 31 March 30-Jun-24 1 April – 30 April 30-Jun-24 1 May – 31 May 31-Jul-24 1 June – 30 June 31-Aug-24 1 July – 31 July 30-Sep-24 1 August – 31 August 31-Oct-24 1 September – 30 September 31-Oct-24 1 October – 31 October 30-Nov-24 1 November – 30 November 30-Nov-24 1 December – 31 December 31-Dec-24 Where a juridical person has more than one License, the License with the earliest issuance date shall be used. New Licensees incorporated after 01st March 2024 Category Deadline UAE licenses including FZE licenses 3 months from date of registration Foreign licensees with management and control in UAE 3 months from end of financial year Non residents juridical persons (existing) before 01stMarch 2024 Category Deadline A person that has a Permanent Establishment in the State 9 months from the date of existence of the PE A person that has a nexus in the State 3 months from March 1st, 2024, i.e., May 2024 Non residents juridical persons (existing) before 01stMarch 2024 Category Deadline A person that has a Permanent Establishment in the State 6 months from the date of existence of the PE A person that has a nexus in the State 3 months from date of establishment of the nexus   Natural person (including sole establishment) Category Deadline Resident natural person conducting business during 2024 and onwards exceeding AED 1 million. 31st March of subsequent calendar year. Non resident natural person conducting business during 2024 and exceeding AED 1 million. 3 months from date of meeting the requirements. Penalty for Late Registration Where a Persons fail to submit a Tax Registration application as per the timelines stated above, Administrative Penalties shall be applied in accordance with Cabinet Decision No. 75 of 2023 referred to above, which is AED 10,000

corporate tax services in Dubai
Corporate Tax

Introduction to Corporate Tax – 2023

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Corporate Tax in Dubai from 1st June 2023 The UAE government issued a new decree regarding the implementation of Corporate Tax services in Dubai on 09 December 2022. The Corporate Tax in Dubai Law is effective for financial years starting on or after 1 June 2023. The new tax regime is introduced to further strengthen UAE’s position as a global business hub and achieve its strategic objectives to aid development and transformation. Also, the corporate tax law intends to meet international standards of the tax system and avoid tax evasion and harmful tax practices. It is essential for businesses in UAE to understand the concepts of the updated tax policies. What Is Corporate Tax? Corporate tax in Dubai is a form of direct tax imposed on the profit or net income of corporations and other business entities in the UAE which is commonly called Corporate Income Tax or Business Profits Tax. Corporate Tax in Dubai requires businesses to pay a certain percentage of their profit as taxes. Who Should Pay Corporate Tax? UAE companies and other juridical persons that are incorporated or effectively managed and controlled in the UAE Natural persons who conduct a Business or Business Activity in the UAE as specified in a Cabinet Decision to be issued in due course Non-resident juridical persons that have a Permanent Establishment in the UAE All businesses with a taxable profit of more than 375,000 AED are subjected to corporate tax. The rate of corporate tax is 9% of the net profit made by the businesses. UAE has intended to support small businesses and start-ups with a ‘0’ % tax if the net profit is up to 3,75,000 AED. Corporate Tax Exemptions In UAE Businesses that exceed the profit threshold of 3,75,000 AED are expected to pay corporate tax in UAE. However, certain types of business or income are exempt from corporate tax requirements. Individuals are not subject to UAE corporate tax. Personal income is exempted from corporate tax Corporate does not apply to foreign investors who do not conduct business activities in UAE Free zone businesses that comply with the regulatory requirements will continue to enjoy corporate tax incentives Capital gains and dividend income received by UAE companies from their qualifying shareholdings Profits from qualifying intragroup transactions and restructurings Corporate Tax in Dubai Rates As per the Ministry of Finance, the percentage of corporate tax is as follows: 0% for taxable income up to AED 375,000 9% for taxable income above AED 375,000 0% for qualifying income that meets the qualifying free zone income 9% for taxable income that does not meet the qualifying income definition MAATS Services in Corporate Tax Since the announcement, corporate tax services in Dubai has created a little hassle among businesses and professionals. MAATS, the best accounting firm in Dubai helps businesses comply with the new corporate tax system by providing support and guidance to smoothly adapt to the updated tax policies. We have professional services in corporate tax registration, corporate tax planning, corporate tax advisory services, and corporate tax accounting. Our team of expert and experienced tax consultants offers regular updates, clears all queries, and takes care of any complications while you focus on your business.

Corporate tax in UAE
Corporate Tax

Impact of UAE Corporate tax on Mainland Vs Freezone businesses

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The UAE is known to be an extremely favourable place for investors worldwide due to the supporting policies and business environment. The UAE is a leading international financial, commercial space and tourism spot in the Middle East region. The nation has introduced a federal corporate income tax (CIT) which is to be in effect from June 1st, 2023. The introduction of corporate income tax could directly influence Mainland as well as Freezone businesses. The Corporate tax in UAE The UAE corporate tax is a direct form of tax levied on the profit of business entities. UAE Corporate Tax will apply to all businesses in the UAE, except for the extraction of natural resources, which will remain subject to Emirate-level corporate taxation. Foreign entities, individuals and businesses will be subject to Corporate Tax only if they conduct a trade or business in the UAE in an ongoing or regular manner. Mainland vs. Freezone businesses in the UAE There are the 3 jurisdictions- Mainland, Freezone and Offshore with evident differences with respect to several criteria. Mainland, Freezone and Offshore businesses have differences in terms of ownership, the scope of business, office space, visa eligibility, company audit and others. Mainland companies and corporate tax in UAE A mainland company is nothing but an onshore company that is registered under the administrative authority of the concerned Emirate. A UAE mainland company is mainly characterized by free trading opportunities. The company’s trade license is issued by the Department of Economic Development of the particular Emirate. A registered mainland company in the UAE is authorized to trade in the UAE local market as well as outside the UAE. Corporate Tax will be charged on the annual taxable income of a Mainland business as follows: For small businesses with taxable profits not exceeding AED 375,000 (approximately USD 102,100) the CIT rate is set at 0% in order to facilitate the development of start-ups, for taxable income exceeding AED 375,000; and a different tax rate (not yet specified) for large multinationals that meet specific criteria sets. Freezone companies and corporate tax in UAE In the UAE, there are many Free Zones. A free zone company is formed within a special jurisdiction that comes under the specific Emirate. Free zone jurisdictions have their own guidelines and have a government regulatory body, the Free Zone Authority. A free zone company is characterized by the benefits of 100% foreign ownership and tax concessions. It can only trade within the free zone and outside the UAE. In the context of Corporate Tax Planning Freezones will be subjected to the new Corporate Income Tax. The tax incentives offered by the Free Zones will be considered by the regime for the businesses there that meet the tax requirements and do not engage in business domestically with the UAE mainland business enterprises or individuals. The now free zones interest the foreign investors with a zero corporate tax regime. At present, the companies functioning in the free zones are subjected to this zero per cent corporate tax and also zero per cent personal income tax. Free zone companies are permitted to trade within the zone limits and they can also trade internationally as re-exports. These companies will profit from the corporate tax incentives. Free zone companies are permitted to carry trade in the mainland area as per the agreement with the local distributors. It helps free zone businesses widen their mainland market and build a large customer base for their products and services. Some free zone areas also offer a dual license that allows the companies to extend their activities to the mainland. These free zone companies can carry on business on the mainland from their offices in the free zone. There are also chances that these companies may affect by the new CT law. Choose the best corporate tax consultancy in the UAE Investors and entrepreneurs are very much confused about the new corporate tax. As they are eager to know how the UAE corporate tax will affect their businesses, the mainland, as well as the free zone companies, are advised to wait for more clarity from the Ministry of Finance—but consulting an established tax consultancy with the necessary experience in the field as MAATS can help you with adequate information regarding corporate tax advisory. MAATS is a reliable accounting, auditing and VAT and Corporate tax consultancy service provider, that guides the clients with relevant and updated information to keep in compliance with government rules.

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