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Corporate Tax Guide on Natural Persons' Registration for Corporate Tax Purposes

For individuals engaged in business activities within the United Arab Emirates, the pivotal inquiry revolves around the necessity of Corporate Tax registration. The recently revised guide specifies that effective 2024, natural persons whose annual gross receipts from business operations exceed AED 1 million are obligated to register. This encompasses earnings derived from diverse sources such as trade, professional services, freelance work, commissions from agency engagements, and rental income from commercial property. 

Notable Cases and Exceptions for Corporate tax registration for natural persons in the UAE

The corporate tax law for natural persons does, however, also provide several exceptions. 

You are exempt from registering for corporate tax if:

  • Your entire revenue is less than AED one million.
  • Your employment, salaries, or wages are your only revenue sources.
  • You are the only one who earns rental money from your home property.
  • You engage in sporadic or one-time business dealings that don't belong to a continuous enterprise activity.

Similar to the resident natural person threshold, registration is only required for non-resident genuine people with a permanent establishment in the UAE who generate more than AED 1 million in revenue annually. If you are still determining your eligibility for corporate tax registration, you are advised to get a consultation from the corporate tax consultants in the UAE.

Main points to note for a Natural person's registration for corporate tax.

Some of the main points to be kept under consideration for the corporate tax registration for natural persons in the UAE are:

  • Individual partners in unincorporated partnerships that carry out business or business activity in the United Arab Emirates are considered natural persons, as are sole firms.
  • Regardless of their nationality, residency status, source of income (domestic or foreign), or length of stay in the country, natural persons conducting business or business activities in the United Arab Emirates are Resident Persons for Corporate Tax.
  • When a non-resident natural person receives state-sourced income, they might be required to pay withholding tax (at the present rate of 0%). However, they wouldn't need to register with the FTA to receive this income.

Implications for Partnerships for Natural Person's registration for corporate tax in the UAE

Unincorporated partnerships introduce another level of intricacy. If you are a partner in such a partnership, you must determine your distributive share of the partnership's income for the calendar year to determine your taxability. Registration becomes required if your share of the proceeds from any other commercial activity exceeds AED 1 million in total turnover when added to your portion.

To ensure a smoother corporate tax registration for your partnerships you may consult the corporate tax consultants in the UAE for clarifications.

The registration process for Natural Persons’ Registration for Corporate Tax in the UAE

The book offers detailed registration directions after you've determined your duty to do so. You can use your Emirates ID or Tax Card to register online using the FTA's eTax portal. The site will guide you through the process, which will ask for some basic details about your financial and company operations. Your Tax Registration Number (TRN), your unique identification number for all upcoming tax transactions with the FTA, will be issued to you upon successful registration.

Requirements for Compliance for natural persons for corporate tax registration in the UAE

Signing up is merely the initial phase for corporate tax registration. Post registration, you will be subject to several compliance requirements to stay up to date with the FTA norms, such as:

  • Filing Tax Returns: Using the eTax portal, you must electronically file your yearly tax returns, stating your taxable income and determining your tax obligation.
  • Keeping Records: After the applicable tax filing deadline, maintain accurate records of your business's revenue and outlays for at least five years.
  • Tax Payment: To avoid penalties, pay your estimated tax liability within the allotted time.

The recently released FTA guidance provides clarification and a compliance roadmap for natural person registration under corporate tax. You may confidently and efficiently navigate this new tax environment by knowing your registration responsibility, registration process, and ongoing compliance responsibilities. Recall that being knowledgeable and getting expert advice when required will enable you to successfully handle your tax issues and support your company's growth.

Seek the Expert Services of Top Tax Consultants in UAE

While the updated Corporate Tax Guide for Natural Persons gives valuable information, it is strongly recommended to engage knowledgeable tax experts in UAE. They can assist you in ensuring compliance, minimizing your tax liability, and interpreting the legislation in the context of your business activities. The corporate tax consultants in Dubai boast a team of experts ready to help you determine your eligibility for corporate tax registration as a natural person, simplifying the process from registration to ensuring your company remains tax compliant, with accounting systems maintained in accordance with FTA guidelines. Thus, contact us today and we shall be glad to assist you. 

Read More: Comprehensive to Business Tax Registration in UAE

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.