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How Will Individuals Be Subject to Corporate Tax in the UAE?

UAE proceeds to draw hundreds of experts each year who are looking for stimulating employment possibilities. The UAE government has put out several progressive and refined actions to solidify the UAE's role as a top location for relocating, laboring, and investing. This includes the creation of a creative locale in Dubai, the "Project of the 50," and new visa programs like the Golden Visa and Freelancers permit. The number of workers in the UAE will significantly increase, as a result of these developments. Henceforth, the introduction of corporate tax in UAE on individuals is going to play a great role in this regard. It is crucial to assess the terms of corporate tax law for natural persons (individuals). Thus, it is often advised to seek expert consultation from a trusted corporate tax consultant se.

Impact of Corporate Tax on Individuals

Under the proposed UAE corporate tax regime, neither employment earnings nor personal earnings, including dividends, rental revenue from UAE real estate investments, salary allowance, or any investment profit obtained in a personal capacity, will be subject to corporate taxation. However, according to the private consultation document, anyone conducting business or engaging in commercial activity in the UAE, as well as anyone running sole proprietorships or sole establishments, under any commercial license or trade license, will be liable to corporate income tax in UAE.

The requirement of corporate tax for an individual engrossed in business depends upon the fact that, whether that individual needs to attain a commercial permit or equivalent license from the pertinent competent authority. Relevant competent authorities may include, registration authority associated with the Free zone or the relevant department of economic development. The corporation itself shall not be liable for corporate tax. Still more, individual partners in an unincorporated coalition that executes business in the UAE will also be prone to a specific UAE corporate tax rate, under the framework of the profit produced through their partnership enterprise.

  • The suggested corporate tax will not apply to earnings from real estate in UAE and other ventures held by a private or family trust on behalf of successors who meet up with the definition of a Natural Person as per the Corporate Tax regime. Earnings from real estate in UAE and other ventures held by a private or family trust are exempt from Corporate Tax as these businesses will remain subject to the current Emirate Level Corporate Taxation. Further, the Corporate Tax Regime will be implemented without a parallel tax on the income of individuals, (natural persons).
  • People with freelancing visas, and laboring in the UAE must determine whether or not the activity they are engaged in needs any additional business or trade approvals from a competent body. According to the public consultation document, revenue obtained from operations carried out under a freelance permit will typically be subject to UAE corporation tax.
  • Individuals can lease out their equity in the UAE for a short period as per this model. However, they need authorization from the respective authorities. Profits from these short-term rentals are obliged to pay corporate tax.
  • Equity utilized for residential reasons and those wielded for commercial goals, such as offices, shops, etc., are not presently separated by the corporate tax regime. However, it would need to be determined whether renting out properties intended for commercial usage requires any specific permit from any competent sovereignty; if so, then such allowance would also be ruled by the Corporate Tax in UAE.

How Are Corporate Tax Advisory Services Helpful?

Corporate Tax Advisors are immensely helpful for your business to thrive. They enforce a robust review of the current operations of your business. This will enable you to prepare in advance to fulfill the criteria of corporate tax. Moreover, Corporate Tax Advisors check out the legal requirements to tackle any issue regarding compliance and make sure you are operating according to the economic substance regulations. Still more, the best corporate tax consultants in UAE will provide services as Corporate Tax agents. They represent you at the Federal tax authority, in the circumstance of any notice filed by the Federal Tax Authority.

Where to Find the Best Corporate Tax Consultation Services?

Farahat & Co is your one-stop solution to any kind of taxation or compliance issue. We provide consultation on every legal aspect, and corporate tax is no exception. We aim to provide you with honest and efficient consultation on the impending corporation tax law so that you have a complete understanding of how the law will impact your business. Consult our experts today, and we shall be happy to assist you.

Read More : Impact of Corporate Tax in UAE on Oil and Gas Industry

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.