Corporate Tax for Natural Persons and Sole Proprietors in the UAE (2024 Guide)

Introduction:

One of the most frequently searched questions in the UAE is:
“Does Corporate Tax apply to individuals or freelancers?”

The short answer is: Yes — if you’re conducting a business or professional activity and meet the income threshold.

Under UAE Corporate Tax Law, natural persons, including freelancers, influencers, consultants, and sole proprietors, must comply with registration and filing requirements if their income exceeds certain limits. In this blog, we explain how Corporate Tax applies to individuals and sole proprietors — and what you need to do to remain compliant in 2024.

Who is a Natural Person Under UAE Corporate Tax?

A natural person refers to a human individual, as opposed to a legal or corporate entity. Under Federal Decree-Law No. 47 of 2022, natural persons are subject to corporate tax if:

They conduct a business or professional activity in the UAE, and
Their total revenue exceeds AED 1 million per calendar year

Examples of Individuals Who May Be Subject to Corporate Tax

Activity Type	Subject to Corporate Tax?
Freelance graphic designer	✅ If income > AED 1M
Influencer or content creator	✅ If income > AED 1M
Online seller (e-commerce)	✅ If income > AED 1M
Property investor (rental income)	❌ Not under corporate tax
Salary/wage earner (employee)	❌ Not taxable under CT
Consultant under own trade license	✅ If income > AED 1M

Employment income, personal investments, and real estate income (not part of a business) are excluded from corporate tax.

What is the Tax Rate for Natural Persons?

If a natural person qualifies as a Taxable Person, the same UAE corporate tax rates apply:

0% on taxable income up to AED 375,000
9% on taxable income above AED 375,000

The taxable income is calculated after adjusting for allowable deductions and expenses incurred in the business.

Registration Requirements:

If your business income as a natural person exceeds AED 1 million/year, you must:

Register for Corporate Tax via the FTA portal
Maintain proper bookkeeping and accounting records
File a corporate tax return annually

Deadline: Tax returns must be submitted within 9 months after the end of the financial year.

Example: Corporate Tax Calculation for a Sole Proprietor

Let’s say a freelance software developer earns:

Gross income: AED 1,200,000
Allowable business expenses: AED 300,000

Net taxable income = AED 900,000
Corporate Tax:

0% on first AED 375,000 = AED 0
9% on AED 525,000 = AED 47,250

This amount must be filed and paid to the FTA annually.

What Happens if You Don’t Register?

Failing to register when required may result in:

Administrative penalties by the FTA
Back-dated tax liability based on earnings
Risk of losing business license or Free Zone benefits

Many freelancers assume they are exempt — but once you cross AED 1M in annual business income, registration becomes mandatory.

Record-Keeping Obligations:

Natural persons conducting business must:

Maintain invoices, receipts, and contracts
Record income and expenses accurately
Store records for 7 years

These documents may be requested during tax audits or FTA reviews.

Common Questions Answered:

Do I need to register if I’m just freelancing part-time?

Yes, if your business income exceeds AED 1 million/year.

What if I operate under a Free Zone license as a sole proprietor?

You still need to register and file. You may benefit from Free Zone relief (0%) if you meet QFZP conditions.

I only sell products on Instagram — do I need to pay Corporate Tax?

If you earn over AED 1 million annually from sales, sponsorships, or ads — yes, you are a Taxable Person.

Are my personal salary and dividends taxed?

No. Employment income, dividends, capital gains, and bank interest earned in a personal capacity are exempt from Corporate Tax.

Final Thoughts:

Freelancers, consultants, and sole proprietors are an essential part of the UAE economy — and now they’re part of the tax net too. If your annual business income exceeds AED 1 million, you must register, file, and maintain records — or risk penalties.

Need Help With Registration or Tax Filing as a Freelancer or Sole Proprietor?
At Think Biz Management Consultancies, we help you:

Assess your tax liability
Register with the FTA
File accurate returns
Stay audit-ready and compliant

Contact us today to protect your income and grow your business with peace of mind.

Contact number: ‪+971 50 983 0334‬

Email ID: info@alphabets.ae