The UAE Ministry of Finance has recently revised the corporate tax regulations pertaining to resident and non-resident individuals engaging in business or business activities. This significant update aims to foster the growth of small and medium-sized enterprises (SMEs) as well as startups within the Emirates.
According to the Ministry of Finance, individuals involved in business or business activities will be required to comply with corporate tax and registration obligations only if their combined annual turnover surpasses 1 million UAE dirhams ($272,000) within a calendar year.
In 2022, the UAE introduced corporate tax, implementing a standard statutory rate of 9% for taxable profits up to AED 375,000. The application of corporate tax to business profits will commence from the fiscal years commencing on or after June 1, 2023.
To illustrate, the Ministry of Finance clarified that if a UAE Resident operates an online business and the aggregate annual turnover from this venture exceeds AED 1 million, the UAE Resident’s business income derived from the online enterprise will be subjected to Corporate Tax.
However, it should be noted that if the UAE Resident also earns income from a rental property and personal investments, these sources of income would not fall under the purview of Corporate Tax as they belong to the out-of-scope categories, as stated by the Ministry of Finance.
