The UAE Ministry of Finance has recently revised its corporate tax regulations, targeting both resident and non-resident individuals engaged in business activities. This proactive measure aims to facilitate the expansion of small and medium-sized enterprises (SMEs) as well as startups across the Emirates.
According to the Ministry’s announcement, individuals involved in business activities will be required to comply with corporate tax obligations and registration criteria only if their combined annual turnover surpasses AED 1M ($272,000). In the previous year, the UAE implemented a corporate tax system featuring a standard statutory rate of 9% for taxable profits up to AED 375,000. The application of the corporate tax on business profits will commence from the financial years starting on or after 1 June 2023.
“For example, if an individual who is a UAE Resident operates an online business and the combined annual turnover from this business exceeds AED 1M, under the new decision, the UAE Resident business income from the online business would be subject to Corporate Tax,” the Ministry of Finance clarified.
However, if the UAE Resident also earns income from a rental property and personal investments, these sources of income would not be subject to Corporate Tax as they fall under the out-of-scope categories.
