Will a Freelance Professional be Subject to UAE Corporate Tax?
Many people come to UAE because the country gives business owners and freelancers many opportunities. The UAE makes life easy for entrepreneurs. People can start a business, work as a freelancer, and enjoy a good standard of living. But now, with the new corporate tax rules, freelancers need to know if they must pay UAE corporate tax.
Let’s look at how corporate tax works for freelancers in the UAE.
Understanding UAE Corporate Tax
UAE government always supports business and innovation. The government gives businesses great infrastructure, new technology, and full foreign ownership. For many years, companies and freelancers didn’t pay income tax. But now, the Ministry of Finance in UAE has issued Federal Decree-Law No. 47 of 2022 to bring in corporate tax on commercial profits.
From June 1, 2023, UAE has started to collect corporate tax. Businesses and individuals must pay a 9% tax if their net profits go above AED 375,000. Profits less than or equal to AED 375,000 are taxed at 0%. These rules match the global standards, and they help UAE keep up with world tax laws.
Do Freelancers Need to Pay Corporate Tax in UAE?
Let’s make this clear. Corporate tax in UAE is a direct tax on profits earned by businesses or individuals running a business. It’s also called “business profit tax” or “corporate income tax.” The Federal Tax Authority (FTA) collects and manages this tax.
The government says all business and commercial activities must pay corporate tax—except for natural resource extraction. So, freelancers and independent contractors who earn more than AED 375,000 in net income must register for and pay corporate tax. If their income stays under AED 375,000, there’s no corporate tax.
How the Law Works for Freelancers
Freelancers need to follow these rules:
- If you have a freelance permit or license and your net profit goes above AED 375,000, you must pay 9% tax on the profit above this amount.
- If your earnings are under AED 375,000, you pay no corporate tax.
- Freelancers with a business license or permit in a free zone must also check the free zone tax rules.
- Salaries from jobs are not counted for corporate tax; only profits from freelance or business work are taxed.
Quick bullet points:
- Freelancers with net profits over AED 375,000 must pay 9% corporate tax.
- If profit is below AED 375,000, no tax applies.
- Freelancers must get a license or permit to operate.
- Free zone freelancers need to follow extra rules.
- Salaries are not taxed for the freelancer; only business profits are.
Exemptions for Freelancers under UAE Corporate Tax
The government gives several exemptions to make sure people don’t pay tax twice or get taxed unfairly. The following types of income are exempt for freelancers:
- Interest from bank deposits or savings plans: You don’t pay tax on interest earned in UAE banks.
- Income from real estate investments: If you earn rental or investment income from UAE real estate, that’s exempt.
- Dividends, capital gains, and other income from shares: Income from owning shares, stocks, or other securities is not taxed under corporate tax.
Corporate Tax Registration for Freelancers
If you’re a freelancer, you must register with the FTA if your profit goes above AED 375,000. Registration is online. You must submit documents like your Emirates ID, trade license, passport copy, and other business details.
After registering, you must:
- Keep proper financial records.
- Submit your annual corporate tax return on time.
- Pay any due tax before the deadline.
How Mubarak Al Ketbi (MAK) Auditing Can Help Freelancers
When push comes to shove, you shouldn’t let tax rules give you sleepless nights! Mubarak Al Ketbi (MAK) Auditing helps freelancers understand UAE corporate tax. We support you with:
- Free consultation on tax rules for freelancers.
- Step-by-step help for tax registration.
- Checking if your income is exempt.
- Preparing your financial records.
- Filing your annual corporate tax return.
- Advising on free zone business compliance.
For more information, contact us:
- Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- Or contact/WhatsApp: +971 50 276 2132
