UAE urgently announces the application of corporate tax to people
UAE announces urgently that corporation tax would be applied to individuals. The Cabinet Resolution No. (49) of 2023 has been issued, according to a statement from the Ministry of Finance of the United Arab Emirates.
The tax treatment of resident and non-resident individuals who run firms or engage in other kinds of economic activity for the purposes of the corporate tax law is covered by this resolution.
"The new decision confirms the UAE's commitment to implementing a competitive tax system for both local and foreign investors and individuals," said Younis Haji Al-Khoury, Undersecretary of the Ministry of Finance. "By streamlining the corporate tax structure, which enhances the favourable business climate that supports the expansion of small businesses, startups, and the economy as a whole."
The decision was made in order to make clear the complexities of applying the UAE's corporate tax system to natural persons (referred to here as individuals) and to ensure that the tax is only assessed on the business income or operations of those natural persons. to engage in) is not subject to corporation tax, since individuals who carry on business or business activities will only be subject to corporate tax and tax registration requirements if their aggregate sales v This is due to the fact that those who conduct business or engage in business activities are regarded as conducting business.
How to calculate personal taxes
For instance, under the new decision, any business income a resident of the UAE earns from his or her Internet-based work will be subject to corporate taxation if the value of the business' annual combined sales is greater than one million dirhams. This is true even if the person's total annual revenues are under a million dirhams.
However, if the person living in the country additionally earns money through personal investments and rental properties, these sources of income won't be subject to corporation tax because, in accordance with the published decision, they fall within exemptions from the tax's reach. The individual will not be charged company tax in this scenario.