# UAE Corporate Tax Guide: Essential Tips for Natural Persons The United Arab Emirates introduced Corporate Tax in June 2023. While the regime primarily applies to companies, it can also apply to natural persons—individuals—who conduct business activities in the UAE. This guide explains when UAE Corporate Tax applies to individuals, which income is taxable, registration and filing requirements, deregistration rules, and accounting record obligations. ## When Does UAE Corporate Tax Apply to Natural Persons? A natural person may be treated as a taxable person for UAE Corporate Tax purposes if they: - Conduct a business or business activity in the UAE - Have a permanent establishment in the UAE - Earn income sourced from the UAE, meaning income accrued in or derived from the country Individuals with annual turnover not exceeding AED 1 million in a Gregorian calendar year are not required to register for or pay Corporate Tax. This threshold applies to turnover from business activities conducted in the UAE and applies to tax years starting from 1 January 2024. ## Which Income of Natural Persons Is Subject to Corporate Tax? A natural person is subject to Corporate Tax on income from a business or business activity conducted in the UAE. Certain income types are not subject to Corporate Tax in the hands of natural persons and are excluded from the turnover threshold: - **Wages:** Income from employment contracts, including salaries, bonuses, and in-kind benefits. - **Personal investment income:** Dividends, interest, and investment gains or losses, provided the investment activity is not conducted through a licence, is not required to be conducted through a licence, and is not considered a commercial business. - **Real estate investment income:** Income from selling, leasing, or renting real estate, provided the activity is not conducted through a licence or is not required to be conducted through a licence. ## Corporate Tax Rate for Natural Persons Individuals conducting business in the UAE with annual turnover exceeding AED 1 million may be subject to Corporate Tax. The applicable tax treatment is: - The first AED 375,000 of taxable income is taxed at 0%. - Taxable income exceeding AED 375,000 is taxed at 9%. ## Tax Period for Natural Persons For individuals, the tax year follows the Gregorian calendar year, running from 1 January to 31 December. The first tax period for natural persons begins on 1 January 2024 and ends on 31 December 2024. ## Corporate Tax Registration Requirements Natural persons conducting business in the UAE must register for Corporate Tax if their annual turnover exceeds AED 1 million in a Gregorian calendar year beginning on or after 1 January 2024. Key registration points include: - Registration is due by 31 March of the following year. - For example, if an individual’s turnover exceeds AED 1 million on 15 June 2024, they must register by 31 March 2025. - The Corporate Tax return for the 2024 tax period should be filed by 30 September 2025. - Failure to register on time may result in a penalty of AED 10,000. ## Time Limit for Filing Corporate Tax Returns Natural persons engaged in business activities subject to Corporate Tax must file a single Corporate Tax return with the Federal Tax Authority. This return covers all businesses and business activities conducted by the individual and must be filed within nine months from the end of the relevant tax period. ## What Happens If Turnover Falls Below AED 1 Million Later? If a natural person is already registered for Corporate Tax, they must maintain their registration even if annual turnover later falls below AED 1 million. Important points include: - Deregistration is only allowed if the individual completely stops conducting business or business activities in the UAE. - The Tax Registration Number must remain active regardless of turnover. - If turnover remains below AED 1 million, a nil tax return must still be filed by 30 September of the following year. ## Deregistration Rules A natural person registered for Corporate Tax must apply for deregistration with the Federal Tax Authority if their business or business activity ceases. Deregistration requirements include: - The application is mandatory when the business or business activity stops. - Cessation may occur due to dissolution, liquidation, or other reasons. - The deregistration application must be submitted within three months of the termination date. - A natural person has only one Tax Registration Number for all businesses or business activities. - Deregistration is only possible when all business activities have ceased. ## Books of Accounts and Financial Statements Natural persons subject to Corporate Tax must maintain proper accounting records and prepare financial statements where required. ### Accounting Basis The general rule is that natural persons must use the accrual basis of accounting. However, if turnover is AED 3 million or less, the cash basis of accounting may be used. Approval from the Federal Tax Authority is required for exceptions beyond this AED 3 million limit. ### Financial Statements Financial statements must be prepared in line with International Financial Reporting Standards. Additional requirements include: - If turnover is AED 50 million or less, IFRS for SMEs may be applied. - Financial statements must include all business activities subject to Corporate Tax. - If turnover exceeds AED 50 million, audited financial statements are mandatory. ### Record Keeping All records and supporting documents must be kept for seven years from the end of the tax period to which they relate. ## Bottom Line Understanding UAE Corporate Tax as an individual can be challenging, particularly when business income, registration thresholds, filing deadlines, and record-keeping obligations are involved. BCL Globiz supports individuals and businesses with UAE Corporate Tax compliance, helping ensure accurate filings, clearer tax treatment, and better compliance with Federal Tax Authority requirements.