Corporate tax for physical persons

We have important news for all individuals doing business in the UAE! 

We are pleased to announce that Corporate Tax guide for natural persons has been published. This will give you clarity and help you understand the tax process. Let’s look at some important points that have been clarified:

1. The first potential taxable year for natural persons starts on 01 January 2024 (i.e. the 1st tax return has to be filed till 30 September 2025 for those persons who is subject to corporate tax)

2. Registration for corporate tax is required only after the turnover has exceeded AED1m in a year.

3. 1 tax return for all businesses and business activities of the person.

4. Wage, personal investment income (including from selling personal cars) and real estate investment income (capital gain and rent income) are exempt and excluding from the threshold above.

5. Special situations for non-residents.

6. Resident for Corporate tax purposes is not affected by whether immigration, work permit and business licensing requirements have been met.

7. Calculation of corporate tax for natural persons including interest expense allowance.

8. Interactions with other businesses including related parties.

9. Amounts withdrawn by a natural person from their sole proprietorship business even if mentioned wages cannot be deducted for corporate tax purposes.

10. Accounting standards – IFRS (if turnover is less than AED50m, IFRS for SMEs can be used); if turover is less than AED3m – cash basis can be used instead of accrual.

11. Audit is obligatory when the turnover is above AED50m.

12. List of commercial businesses.

If you have any additional questions or require further information on these issues, please contact us. We are always ready to help!