As per the proposed new UAE corporate tax law coming into effect from or after June 1, 2023, individuals are subject to and exempt from corporate tax under certain criteria.
Who are Individuals?
Individuals are any regular persons who either carry out a business in the UAE as a freelancer, earn an income or carry out investments in the UAE.
In our blog, we cover how they are affected by corporate tax.
Corporate Tax Regime for Individuals
According to the Frequently asked questions on the Ministry of Finance (MoF), individuals will be imposed with corporate tax when they carry out a business in the UAE under a commercial license such as a freelance license.
Individuals however will not be subject to UAE Corporate tax on:
- Salaries and any other income earned from employment, whether private or public sector. Earned income includes wages, salary, tips, bonuses, and any commissions received.
- Personal Investments in real estate or precious metals unless a commercial permit or license is needed to carry out the activity. In case, a commercial permit or license is required to carry out the activity, then the individual will be subject to corporate tax.
- Capital gains, dividends, and any other income that is earned from holding personal equity investments such as stock trading or purchasing company shares.
- Interests and any other income received from saving schemes or bank deposits.
In other words, Individuals will not be subject to corporate tax based on any income earned from employment, real estate, investments in shares, and other personal income unrelated to a trade or business in the UAE.
You may also like to read - Guide On Corporate Tax In UAE On Oil And Gas Industries
Corporate Tax UAE
Therefore, individuals under most circumstances will not be subject to corporate tax. However, in reference to an individual having (or being required to obtain) a business license or permit to carry out business activity of any kind in the UAE, whether commercial, industrial, or professional, would be subject to corporate tax.
At Corporate Tax UAE, our experts can guide you on the impact of corporate tax on your business and help you with the complete process of registration so you can stay compliant. Give us a call now!
Abrar Ahmad holds a Master’s as well as an MPhil in Finance and has an extensive experience of 10+ years in managing all aspects of Taxation, VAT Consulting and Accounting. He also carries with him a working knowledge of corporate tax and has helped drive value and growth to the businesses of numerous clients.