Corporate Tax – Natural Person

Frequently Asked Questions

In the context of the Corporate Tax Law, a “Natural Person” refers to an individual.

Only individuals, who are engaged in a business or business activity, as defined in a forthcoming Cabinet Decision, will be subject to UAE CT. Individuals involved in other activities generally fall outside the scope of the Corporate Tax regime.

For certain types of business activities, natural persons have the option to establish a sole proprietorship or civil company. From a CT perspective, these entities will be treated as the natural person or persons who own them.

All money generated by a natural person conducting business in the UAE is included in that person’s taxable income. This includes earnings made from sources outside the United Arab Emirates inasmuch as they are connected to company operations carried out there.

In such cases, the individual will file a single CT return that covers all their business activities falling within the scope of UAE CT.

No matter if it comes from the public or private sector, a person’s salary and other job income are not covered by the UAE CT. Employment income may encompass ongoing service arrangements where the majority of the individual’s income is derived from a single customer, and the service income represents compensation for the individual’s labor.

According to the impending Cabinet Decision, self-employed people will only be liable to UAE CT if their activity counts as a taxable business or business activity. Even if considered taxable, no CT will be payable on the first AED 375,000 of net income/profit earned from the activity. Further relief, such as small business relief, may be available to self-employed individuals and other individual entrepreneurs.

Income from personal bank deposits, including interest and other personal investment and savings income, is generally not subject to UAE CT.

Both UAE and foreign individuals will not be subject to UAE CT on dividends, capital gains, and other income earned from personally owning shares or other securities.

UAE CT is often not applied to income derived by an individual from personal investments in UAE real estate.

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