Key takeaways
- An individual in the UAE pays corporate tax on business income only when turnover from that business exceeds AED 1,000,000 within a Gregorian calendar year (Cabinet Decision No. 49 of 2023).
- UAE corporate tax doesn't apply to an individual's wages, personal investment income, or real estate investment income that needs no licence, whatever the amount.
- Once an individual's business turnover passes AED 1,000,000, taxable income up to AED 375,000 is taxed at 0% and the excess at 9% (FTA guide for natural persons, November 2023).
- A resident individual who passes the AED 1,000,000 test in a calendar year must apply to register for corporate tax by 31 March of the following year (FTA Decision No. 3 of 2024).
- Missing the registration deadline carries an administrative penalty of AED 10,000 under Cabinet Decision No. 75 of 2023.
- Freelancers and sole establishment owners are covered by the same test, and a sole establishment and its owner count as one taxpayer.
Do individuals pay corporate tax on their business income in the UAE?
Yes, but only a minority do: an individual is subject to UAE corporate tax when they run a business or business activity in the UAE and its turnover exceeds AED 1,000,000 in a calendar year. Below that line there's no registration and no tax, and above it the business income is taxed under the same rules as a company's.
The test has two parts, and both must be met. First, the individual must carry on a business or business activity in the UAE. Second, the gross income from that activity (turnover, measured before deducting costs) must pass AED 1,000,000 between 1 January and 31 December. The FTA states this on its natural person page and in its guide for natural persons. The legal basis is Cabinet Decision No. 49 of 2023, which took effect on 1 June 2023 and implements Article 11 of Federal Decree-Law No. 47 of 2022. The first tax period it could apply to was the 2024 calendar year.
What income counts towards the AED 1 million threshold?
Turnover from a licensed or licence-requiring business counts; wages, personal investment income and unlicensed real estate investment income never do. The FTA measures turnover as gross income, so an individual earning AED 1,200,000 in fees with AED 900,000 of costs still exceeds the threshold.
| Income type | Counts towards AED 1,000,000? | Condition |
|---|---|---|
| Freelance or consulting fees | Yes | Gross income before costs |
| Trading or services through a sole establishment | Yes | Owner and sole establishment are one taxpayer |
| Share of income from an unincorporated partnership | Yes | Each partner is assessed on their share |
| Wages (including allowances and bonuses) | No | Paid under an employment contract |
| Personal investment income | No | Not conducted through, or requiring, a licence |
| Rental or sale of property | No | Only if no licence is conducted or required |
| Licensed real estate or investment activity | Yes | Licence held or required |
Source: Cabinet Decision No. 49 of 2023 and the FTA guide for natural persons, checked 29 October 2026.
Say a Dubai consultant bills AED 1,150,000 in a calendar year through a mainland licence and also earns AED 200,000 in salary from a separate employer. Only the AED 1,150,000 is tested; the salary is ignored, and the consultant is over the line by AED 150,000.
How much tax does an individual pay once over the threshold?
An individual who exceeds the threshold pays 0% on taxable income up to AED 375,000 and 9% on the excess, the same rate structure that applies to companies. Tax is charged on taxable income, which is accounting profit adjusted under the corporate tax rules, not on turnover.
So the AED 1,000,000 figure decides whether corporate tax applies at all; it doesn't mean the individual pays tax on the first million. The FTA guide says the tax period is the calendar year, and that one return covers all of the individual's business activities. Financial statements follow IFRS, though IFRS for SMEs is allowed where turnover doesn't exceed AED 50 million, and cash-basis accounting is allowed where turnover doesn't exceed AED 3 million. Audited statements are required where turnover exceeds AED 50 million. Small Business Relief may also be available where revenue doesn't exceed AED 3 million in the current and prior periods; check the current conditions on the FTA site before relying on it.
The salary-or-dividend question for an owner of a company is a different matter. A shareholder who doesn't conduct business independently of the company isn't required to register just by owning shares, according to the FTA's guide. The company itself is the taxpayer.
When and how does an individual register for corporate tax?
A resident individual whose turnover passes AED 1,000,000 must apply to register by 31 March of the following calendar year. Non-resident individuals have three months from the date they meet the conditions. Both timelines come from FTA Decision No. 3 of 2024, effective 1 March 2024.
The steps for a resident individual:
- Add up gross business turnover for the calendar year, excluding wages, personal investment income and unlicensed real estate investment income.
- If the total exceeds AED 1,000,000, log in to EmaraTax (existing VAT or Excise Tax users can use their current login; new users create one).
- Complete the corporate tax registration form, attaching a passport photo page, plus Emirates ID front and back where applicable.
- Submit before 31 March of the following year; the FTA aims to review a completed application within 20 business days.
- File one corporate tax return covering all business activities within nine months of the end of the calendar year, so a 2026 return is due by 30 September 2027.
The FTA's own example is that a person who passes the threshold in 2024 registers by 31 March 2025 and files before the end of September 2025.
What are the penalties for individuals who don't register or keep records?
The headline penalty is AED 10,000 for failing to submit a registration application within the FTA's deadline. The same decision, Cabinet Decision No. 75 of 2023, sets AED 10,000 for failing to keep required records, rising to AED 20,000 for a repeat within 24 months. Late payment of tax attracts a monthly penalty calculated at 14% per annum on the unpaid amount.
| Violation | Penalty | Source |
|---|---|---|
| Late registration application | AED 10,000 | Cabinet Decision No. 75 of 2023 |
| Failure to keep required records | AED 10,000 (AED 20,000 if repeated within 24 months) | Cabinet Decision No. 75 of 2023 |
| Late payment of corporate tax | Monthly penalty at 14% per annum on unpaid tax | Cabinet Decision No. 75 of 2023 |
Accurate as of 29 October 2026. The FTA has power to waive some penalties in some circumstances, so check its current clarifications on tax.gov.ae before assuming a penalty is final.
AED 1,000,000: turnover from an individual's business or business activity in a calendar year above which UAE corporate tax applies to that individual. Source: Cabinet Decision No. 49 of 2023, Article 2, checked 29 October 2026.
What most guides don't tell you
Registration doesn't switch off when turnover drops. Once an individual registers, they stay registered until all business activity ceases, and in a later year with turnover under AED 1,000,000 they still have to file a nil return. Deregistration must be applied for within three months of ceasing all business activity, and it isn't approved until every return is filed and every penalty is paid.
Several small activities add up. A person has one Tax Registration Number and one turnover figure. A sole establishment, freelance work and a partnership share are combined, so three businesses of AED 400,000 each put the owner over the line even though none looks big alone.
"No licence" is the condition for the exclusions, not the amount. Property letting and personal investing are excluded only when no licence is held or required. Licence status is a question of fact, so an individual who rents out properties through a licensed activity can't rely on the exclusion.
Withdrawals from a sole establishment aren't deductible. The FTA's guide states that amounts an owner takes from the business, even when recorded as salary, are not deductible. That affects how taxable income is worked out once the business is over the threshold.
Which deadlines apply to your business?
If you run a business as an individual and aren't sure which tax dates apply, the free UAE compliance calendar lists them for your company. It's a free calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Frequently asked questions
Do freelancers have to pay corporate tax in the UAE?
Only if their freelance turnover (gross income before costs) exceeds AED 1,000,000 in a calendar year. The FTA's guide for natural persons says freelancers and sole proprietors are covered by the same test as any other individual running a business.
What is the AED 1 million turnover rule for natural persons?
It comes from Cabinet Decision No. 49 of 2023: an individual's business is a taxable activity only when total turnover from it exceeds AED 1,000,000 within a Gregorian calendar year. Turnover means gross income, and wages, personal investment income and qualifying real estate investment income don't count toward it.
Do sole establishments need to register for corporate tax?
Only when the owner's combined turnover passes AED 1,000,000 in a calendar year. The FTA treats a sole establishment and its owner as one Taxable Person with one Tax Registration Number, so turnover from several sole establishments is added together.
Is rental income from property subject to UAE corporate tax?
Not if the letting is done in a personal capacity and doesn't require a licence from a licensing authority; that income is excluded whatever the amount. If the activity is licensed or required to be licensed, its turnover counts toward the AED 1,000,000 test.
Is personal investment income taxed under corporate tax?
No. Investment activity an individual carries on for their own account, without a licence and without needing one, is excluded from corporate tax regardless of size. Investment run through a licence is treated as a business activity and counts toward the threshold.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Cabinet Decision No. 49 of 2023 (Federal Tax Authority)
- FTA Corporate Tax Guide: Taxation of Natural Persons, November 2023
- FTA Corporate Tax Guide: Registration of Natural Persons, December 2023
- FTA: Basis of taxation for natural persons
- FTA: Decision on specified timeframes for corporate tax registration (Decision No. 3 of 2024)
- Cabinet Decision No. 75 of 2023 on administrative penalties for corporate tax (UAE Legislation portal)
Last checked: 29 October 2026
This is general information, not tax or legal advice for your specific situation.