Understanding Corporate Tax Guidelines in the UAE: Key Considerations for Natural Persons

Every business operating in the UAE, or considering a UAE entry, needs to be familiar with the rapid changes in the increasingly dynamic tax landscape in the UAE to be compliant and ensure seamless transition. Businesses have huge challenges in compliance and financial planning matters due to UAE corporate tax regulations, enhancing the role of UAE’s corporate tax consultants in a big way. Every business is required by law to comply with its tax obligations. Tax penalties for non-compliance can be hefty and unaffordable for any business. Therefore, being aware of tax responsibilities from day one is crucial.

Here in this blog, we highlight how corporate tax applies to natural persons as per the UAE FTA, with key registration and compliance details.

Under UAE Corporate Tax: Idea about a natural person

According to the UAE FTA guidelines, which outline UAE corporate tax law, taxpayers are classified as natural persons and judicial persons.  A person (individual) under UAE corporate tax law conducting business or any business activity in the UAE, is defined as a natural person.

Corporate Tax Applicability for Natural Persons in the UAE

If the annual turnover from a business or business activity in the UAE exceeds AED 1 million, a natural person is subject to UAE Corporate tax in the Gregorian period. There is no need to register for UAE corporate tax or meet the filing requirements if annual turnover falls below the threshold.  For a natural person involved in multiple business activities in the UAE, corporate tax applies if the total revenue exceeds AED 1 million annually.

Income from activities like personal investment, real estate, and salaries are exempt from UAE corporate tax and is excluded from the AED 1 million turnover threshold.

UAE Corporate Tax timeliness for a Natural person

Under UAE corporate tax regulations, the natural person in the UAE must file Corporate tax within the Gregorian calendar framework, which spans from January to December as their official tax year.

UAE Corporate Tax: Independent of nationality and Visa Status

Corporate tax in the UAE applies to both Emirati and non-Emirati individuals. Corporate tax in the UAE is based on business activity, not nationality or visa status. A natural person must register for and pay Corporate Tax in the UAE if they earn more than AED 1 million in gross revenue from business activities in the UAE in a financial year. Income from business activities within the UAE will also be taxed even if the source of the income is outside the UAE.

UAE Corporate Tax Registration Requirement for a Natural Person

Individuals or natural persons doing business in the UAE must register for UAE Corporate Tax (CT) if they surpass a turnover of AED 1 million in the respective Gregorian calendar year.

For example, if turnover exceeds AED 1 million in 2025, the registration for CT must be completed by March 31, 2026, at the latest. If CT registration is not completed on or before March 31, 2026, you will be fined AED 10,000. So registering in an effective and timely manner and being compliant with the UAE taxation system is important to avoid penalties.

Corporate Tax Deregistration for Natural Persons in the UAE

Natural persons must apply for Corporate Tax (CT) deregistration in the UAE within three months following the dissolution, liquidation, or cessation of their business operations. Failure to comply with this requirement could lead to unnecessary tax obligations.

UAE’s Corporate Tax Return Filing Window

The deadline to file UAE Corporate Tax (CT) returns for natural persons is within 9 months from the close of the relevant tax year.

Registration procedure for a Natural Person in the UAE

The only method to register for UAE corporate tax for a natural person is via the Emaratax portal. The natural person submits a UAE corporate tax return through this portal, and existing VAT or excise taxpayers can use their current credentials. After assessing the application and accompanying documents, the UAE’s FTA will provide a Tax Registration Number once approved.

Financial reporting guidelines for Natural Persons in the UAE

A natural person must prepare a financial statement according to IFRS or IFRS for SMEs, as applicable. For natural persons, the accrual accounting method is mandatory unless their annual turnover is less than AED 3 million and they have been granted permission to use the cash basis method. The IFRS for SMEs applies to businesses with a turnover under AED 50 million, while those above this threshold are required to have their financial statements audited. Financial documents must be maintained for 7 years from the end of the corresponding tax period.

Why is Jaxa a Smart choice for navigating Corporate tax requirements in the UAE?

Jaxa Chartered Accountants is a leading accounting and auditing firm in the UAE and Dubai.  Being a tax-registered agency at the UAE Federal Tax Authority, Jaxa is equipped with immensely qualified corporate tax consultants who are efficient in delivering tax solutions to a diverse clientele. Our seasoned professionals at Jaxa provide VAT, accounting and bookkeeping, audit and assurance services, along with Corporate Tax.

With 18 years of experience in the financial sector, Jaxa stands out as a trusted partner for stress-free business and financial solutions.

Do not look back. We, at JAXA, got you covered. Get in touch with us now.