Corporate Tax Filing UAE: Taxation of Natural Persons

Corporate Tax Filing UAE: Taxation of Natural Persons

Corporate tax filing UAE is a key aspect of the UAE’s fiscal framework. While it mainly targets businesses, individuals engaged in specific business activities may also be subject to it. This article outlines the tax implications for natural persons under corporate tax law and highlights compliance essentials.

Corporate Tax Advisory Dubai: Applicability of Corporate Tax to Natural Persons

Corporate tax advisory Dubai is essential for natural persons who conduct business activities in the UAE. Under the UAE Corporate Tax Law, a Natural Person is an individual who conducts a “Business” or “Business Activity” in the UAE. This includes those maintaining a Permanent Establishment or earning State Sourced Income.

UAE Tax Compliance Services: Key Considerations for Natural Persons

Determining whether a natural person is subject to Corporate Tax depends on:

• Business or Business Activity: Natural persons conducting these activities in the UAE are Taxable and Resident Persons.

• Turnover Threshold: Corporate Tax applies if Turnover exceeds AED 1 million in a year.

• Exempt Income: Wage, personal investment, and real estate income do not count as taxable Business income.

Taxable Income for Natural Persons

Only income derived from Business or Business Activities in the UAE is subject to Corporate Tax. Natural persons with Turnover below AED 1 million are exempt from filing requirements.

Understanding Business and Business Activity

What Is a Business or Business Activity?

The law defines Business as regularly conducted and independent activities. Business Activity includes any transactions carried out as part of these operations.

Threshold for Businesses

Natural persons conducting Business or Business Activities must pay Corporate Tax if Turnover exceeds AED 1 million annually. Income from exempt sources is excluded from this calculation.

Business Activity Nexus

Determining if income relates to UAE-based Business or Business Activities involves:

• Location of Personnel: Income is sourced from the UAE if work occurs primarily there.

• Business Development: Focusing time and resources on the UAE market ties income to the region.

• Assets Used: Using UAE-based assets for income generation links income to UAE activities.

Registration Requirements for UAE Tax Compliance Services

Natural persons register for Corporate Tax only if Turnover exceeds AED 1 million annually. Those in Unincorporated Partnerships must assess their tax liability individually.

Deregistration Process

Natural persons can deregister after ceasing Business or Business Activities. This cessation must be reported to the FTA within three months.