UAE Corporate Tax can apply to a natural person carrying on a Business or Business Activity in the UAE when the relevant business turnover exceeds AED 1 million within a Gregorian calendar year. This is a turnover test for the natural person’s business activity, not a general tax on an individual’s salary or all personal income.
Income streams treated differently
The FTA says wages, personal investment income and real-estate investment income are not considered Business or Business Activity for this test. Whether a particular activity is a business, and how turnover is measured, depends on its legal and commercial facts. Sole establishments owned by a natural person may need to be considered together under the applicable rules.
Practical steps for independent professionals
- Separate business receipts from personal income in the books.
- Track turnover by calendar year and retain contracts, invoices and bank evidence.
- Check the applicable registration deadline if the threshold is exceeded.
- Keep business expense records and assess VAT obligations separately.
Do not confuse this AED 1 million Corporate Tax registration threshold for natural persons with the AED 375,000 VAT mandatory-registration threshold. They measure different things and apply under separate regimes.
Sources: FTA basis of taxation for natural persons and FTA Corporate Tax registration service.
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