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 registration
- Filing a Tax Return and paying any Corporate Tax due within 9 months of the end of their Tax Period
- Retaining all records and documents which support his/her tax position for a period of 7 years following the end of the Tax Period to which they relate
- 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
Power of FTA to Register
FTA has the power to register a Person for Corporate Tax who has failed to do so, effective from the date they should have registered from. A natural person has the right to appeal if they disagree with such a decision.
Tax Deregistration process
1.Cessation of Business
A natural person will only have one Tax Registration Number for Corporate Tax for all Business activities. A natural person should only deregister for Corporate Tax if he/she has ceased conducting all Business or Business Activities.
In case of cessation, a Tax Deregistration application need to be made to the FTA. This application must be made within 3 months of the date of cessation of the Business or Business Activity.
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. The Tax Deregistration will not be approved if the natural person has not filed all the required Tax Returns and paid all due Corporate Tax and administrative Penalties, including the Tax Return for the Tax Period up to and including the date of cessation.
2.Death of a natural person
When a natural person dies, he/she ceases to be a Taxable Person. The settlement of any outstanding Corporate Tax liabilities due from the natural person prior to the date of death, shall be made from the value of the elements of the estate or income arising thereof prior to distribution among the heirs or legatees.
