UAE corporate tax for freelancers and sole traders

Many consultants, designers, developers and other professionals who move to the UAE start by working in their own name rather than through a company. The UAE has no personal income tax, but corporate tax can still apply to an individual who runs a business. This guide explains the rules for natural persons.

The AED 1 million turnover test

Under Cabinet Decision No. 49 of 2023, which came into effect on 1 June 2023, a natural person is subject to corporate tax only where both of these apply:

• they conduct a Business or Business Activity in the UAE; and
• the total turnover from those Businesses or Business Activities exceeds AED 1 million within a Gregorian calendar year (January to December).

The test is based on turnover, not profit. The Federal Tax Authority has confirmed that the threshold applies from calendar year 2024. Non-resident individuals are also covered where they have a permanent establishment in the UAE and turnover above AED 1 million.

Income that does not count

The Cabinet Decision states that the following are not treated as a Business or Business Activity, regardless of the amount of turnover:

• Wages received by an employee under an employment contract.
• Personal investment income, from investment activity a person conducts for their own account, provided it is not conducted through, and does not require, a licence from a UAE licensing authority.
• Real estate investment income, from selling, leasing, subleasing or renting land or property in the UAE, provided it is not conducted through, and does not require, a licence from a UAE licensing authority.

This means a salaried employee who also owns a rented flat and a share portfolio in their own name is generally outside corporate tax on that income. Income from consulting or freelance work, however, counts towards the AED 1 million test.

Registration

• A natural person whose business turnover does not exceed AED 1 million in the calendar year does not need to register for corporate tax.
• Under FTA Decision No. 3 of 2024, a resident natural person who crosses the threshold must register by 31 March of the following Gregorian calendar year.
• A non-resident natural person must register within three months of becoming subject to tax.

Rates and Small Business Relief

Once registered, the standard rates apply: 0% on taxable income up to AED 375,000 and 9% above that, as set by Cabinet Decision No. 116 of 2022.

Resident natural persons can also elect Small Business Relief. Where revenue is AED 3 million or less in the tax period and in every earlier tax period, the person is treated as having no taxable income for that period. The relief has been extended to tax periods ending on or before 31 December 2029. Read our Insight on the extension.

Filing

For individuals, the tax period follows the calendar year. The Federal Tax Authority confirmed that 30 September 2026 was the deadline for filing returns and paying corporate tax for financial years ended 31 December 2025.

Freelancer or company?

Working in your own name keeps things simple while turnover is modest. As the business grows, a free zone or mainland company can offer limited liability, a clearer separation between business and personal money, and access to the Qualifying Free Zone Person regime where its conditions are met. A company is a separate taxable person and does not benefit from the AED 1 million threshold for natural persons, so the choice depends on your activity, clients and plans. Compare the options in our free zone or mainland guide and our corporate tax service.

What to do

• Track business turnover from January each year, separately from salary, personal investments and property income.
• Keep invoices and accounting records from day one, even below the threshold.
• If you expect to pass AED 1 million, plan registration before 31 March of the following year.
• Check how your home country treats the income in the year you move. See the guide for your country.

Sources

• Ministry of Finance: Cabinet Decision No. 49 of 2023
• Federal Tax Authority: Basis of taxation, natural person
• Federal Tax Authority: Guide on natural persons subject to corporate tax
• PwC: FTA Decision No. 3 of 2024 on registration timelines
• Ministry of Finance: Applicable taxable income threshold for corporate tax
• Federal Tax Authority: Small Business Relief
• The National: UAE extends corporate tax relief for small businesses until 2029
• Federal Tax Authority: Corporate tax
• UAE Government portal: Corporate tax

This page gives general information as at the date shown and is not advice for your specific situation. Rules in other countries are summarised for orientation; your home-country position should be confirmed before you act.