The corporate tax system in the UAE operates on a self-assessment basis, meaning that individuals are responsible for determining if they fall under the Corporate Tax purview and must fulfill any associated tax obligations.
Individuals are obligated to register for Corporate Tax only if they meet certain criteria:
They are a resident natural person for corporate purposes.
They are a non-resident natural person for corporate tax purposes with a permanent establishment in the UAE.
They engage in business activities generating a total turnover exceeding AED 1 million within a Gregorian calendar year.
The turnover is not derived from wages, personal investment, or real estate investment.
Natural persons, which include sole establishments and individual partners in unincorporated partnerships conducting business in the UAE, are subject to these conditions.
Determining the turnover threshold involves considering the total turnover from all business activities conducted by a natural person. This total turnover is the sum of all income before any expenses are deducted and should be calculated on an accrual basis, unless the individual follows the cash basis of accounting.
The tax period for a natural person is the Gregorian calendar year, with the first tax period commencing in the year 2024. For businesses established in 2024, the tax period extends from the business commencement date to the end of the calendar year.
A natural person is assigned only one Tax Registration Number (TRN) for Corporate Tax, covering all their business activities. De-registration is applicable only if the individual has ceased all business activities. Eligibility for small business relief does not exempt a person from registering for Corporate Tax if they meet the registration conditions.
For more information on Corporate Tax Law in UAE and its applicability, feel free to contact the expert consultants at ALWAHAT.
