Natural persons in the UAE become liable to Corporate Tax if their total turnover from business activities exceeds AED 1 million in a Gregorian calendar year. Corporate tax rates for natural persons are 0% on taxable income up to AED 375,000 and 9% on taxable income exceeding AED 375,000.
Under Federal Decree- Law No. 47 of 2022, the applicability of corporate tax to natural person is significant, particularly in the context of the business activities. Here’s a summary of the key points:
What is Taxable Person?
Definition of Taxable Person: The law classifies any individual conducting business in the UAE as a “Taxable Person”. This includes the natural persons, which are defined as living human beings, regardless of age or legal capacity.
How Natural Person will be subject to Corporate Tax?
Natural persons who fit these below criteria must comply with corporate tax regulations, which may include registering for tax purposes, filing tax, and paying applicable taxes on their income.
- Engage in business or business activities within UAE.
- Have a permanent establishment in the UAE.
- Derive income source from the UAE business or business activities exceeds AED 1 million within the Gregorian calendar year (January to December).
What are the sources generating income streams, that are not considered as Business or Business Activities?
- Wages
- Personal Investment
- Real Estate Income
Are there any exemptions for Natural Person not to register for Corporate Tax?
Yes, if Natural Person do not conduct any business or business activity within UAE; or if they do conduct Business or business activity generating a turnover not exceeding AED 1 million.
Legal Representation: The law acknowledges minors and incapacitated individuals, allowing their legal representatives to fulfill tax obligations on their behalf.
This framework aims to create a comprehensive taxation system in the UAE, ensuring that all entries engaged in business activities contribute to the tax revenue, regardless of weather they incorporated entities or individual entrepreneurs.
Is Natural Person Eligible for the Application of the Small Business Relief?
Natural Person can of the Small Business Relief exemption in certain jurisdiction, typically depending on specific criteria set by the local tax laws. This relief is often designed to support small businesses and can include exemptions or reduction in property tax, income tax, or other relevant taxes. Eligibility usually depends on factors such as revenue thresholds, the nature of the business, and the number of employees.
How can MAKCA can help for Natural Person Relief on UAE Corporate Tax?
Finding the right and reliable Tax Agent to assist can play a very crucial role in helping individuals and businesses navigate the Natural Person Relief under the UAE Corporate Tax framework.
Mubarak Alketbi Chartered Accountants is well known for delivering the best corporate tax services in the UAE since 2016. Our experts can help you assist with the eligibility assessment, tax structuring, documentation preparation, filing returns, advisory services, tax planning and compliance assurance.
By partnering with us, you can effectively navigate the complexities of corporate tax and take full advantage of available reliefs. If you have specific and more detailed questions, feel free to ask and book a 30-minute free consultation call with us.
