Corporate Tax and Registration of Natural Persons

Registration of Natural Persons in the UAE for Corporate Tax

Individuals, subject to Corporate Tax, mandatorily have to register for Corporate Tax, in order to meet their Corporate Tax obligations, such as filing a Corporate Tax Return and paying any due taxes.

An individual falls within the scope of Corporate Tax and is required to register if:

• They are a Resident Person.

• They are a Non-Resident Person with a Permanent Establishment in the UAE.

• They conduct a Business or Business Activity with a total Turnover exceeding AED 1 million.

• The Turnover is not derived from wages, personal investments, or real estate investments.

Taxable Person:

A Taxable Person can be either an individual or a legal entity. Most Taxable Persons must register for Corporate Tax, except for Non-Resident Persons who earn only State Sourced Income without a Permanent Establishment in the UAE.

Natural Person:

The term "natural person" refers to a living human being of any age, whether residing in the UAE or elsewhere. A natural person is subject to Corporate Tax only if they conduct a Business or Business Activity in the UAE. This includes sole proprietorships and individual partners in Unincorporated Partnerships that engage in a Business or Business Activity in the UAE.

A natural person can be either a Resident Person or a Non-Resident Person.

For minors or incapacitated individuals, the natural person’s Corporate Tax obligations shall be fulfilled by their Legal Representative.

Resident Person

Residence for Corporate Tax purposes is not determined by physical residence in the UAE, citizenship, or a residency visa. To determine if a natural person is considered a Resident Person for Corporate Tax purposes and if their income is taxable, the following approach is used:

1. Residing in the UAE: If a natural person resides in the UAE and conducts Business or Business Activities in the UAE, they are considered a Resident Person

2. Residing Outside the UAE: If a natural person resides outside the UAE (e.g., having their home in another country) but conducts Business or Business Activities in the UAE, they are considered a Resident Person for Corporate Tax purposes

Non-Resident Person

If a natural person resides in a country with a Double Taxation Agreement (DTA) with the UAE and, as a result of the DTA, is not considered a resident of the UAE but has a Permanent Establishment in the UAE, they will be classified as a Non-Resident Person and taxed in the UAE regarding their Permanent Establishment.

Under UAE Corporate Tax Law, if no DTA is applicable, a natural person cannot be considered a Non-Resident with a Permanent Establishment in the UAE. Instead, they would be regarded as a Resident Person.

Since the situation may vary if a Double Taxation Agreement (DTA) applies, each non-resident natural person should evaluate their UAE Corporate Tax status based on their specific circumstances.

Business or Business Activities of a Natural Person Subject to Corporate Tax

Business or Business Activities conducted by a natural person in the UAE are subject to Corporate Tax if the total Turnover from such activities exceeds AED 1 million within a Gregorian calendar year. If the Business or Business Activity is subject to Corporate Tax, the natural person must register for Corporate Tax purposes.

Turnover is defined as the gross amount of income earned during a Gregorian calendar year, meaning it includes all income before any costs are deducted.

When is a Natural Person Not Subject to Corporate Tax and Therefore Not Required to Register?

A natural person is not subject to Corporate Tax and does not need to register for Corporate Tax if their income comes solely from the following sources, regardless of the amount:

• Wage

• Personal Investment income

• Real Estate Investment income

If a natural person earns income from these categories and does not conduct any Business or Business Activities in the UAE, they are not required to register for Corporate Tax purposes.

Persons Not Registered for Value Added Tax and Excise Tax

Natural persons who are not subject to Value Added Tax or Excise Tax but fall within the scope of Corporate Tax ll still be required to register for Corporate Tax purposes.

Timeline for Registration of Natural Persons

Category of Natural Persons -

Deadline for Tax Registration Application

A resident natural person who runs a business or carries out business activity during the calendar year 2024 or subsequent years, and whose total turnover generated for each Gregorian calendar year exceed the limit specified in the relevant tax legislation.

Timeline for Registration of Natural Persons

Category of Natural Persons

A resident natural person who runs a business or carries out business activity during the calendar year 2024 or subsequent years, and whose total turnover generated for each Gregorian calendar year exceed the limit specified in the relevant tax legislation.

Deadline for Tax Registration Application

MARCH 31st of the following Gregorian Calendar year

Category of Natural Persons

A non-resident natural person who runs a business or carries out business activity during the Gregorian calendar year 2024 or subsequent years and whose total turnovers generated exceed the limit specified in the relevant tax legislation

Deadline for Tax Registration Application

3 months from the date of fulfilling the conditions set out to determine taxable persons

Deregistration for Corporate Tax

If a natural person is no longer subject to Corporate Tax, they should deregister, which typically occurs when their Business or Business Activity ceases.

A natural person will have only one Tax Registration Number for Corporate Tax covering all their Business and Business Activities. Deregistration should only be done if they have stopped all Business or Business Activities.

In the event of ceasing Business or Business Activity, the natural person or, in certain cases, their Legal Representative must submit a Tax Deregistration application to the FTA within 3 months of the cessation date. The date of deregistration will be the date the Business or Business Activity ceased, unless the FTA determines otherwise.

Businesses operating in the UAE should reassess their status in light of the regulatory updates. Consulting with expert advisors from ALWAHAT, a leading auditing firm in the UAE, can help evaluate your current tax situation and ensure compliance in the evolving UAE tax landscape.

Reach out to ALWAHAT's tax experts today to arrange your FREE CONSULTATION and leverage their specialized knowledge.