The latest UAE Corporate Tax update concerns individuals who are residents or non-residents and having a business activity. Certain activities will see them under tax net. Image Credit: Shutterstock

Dubai: The UAE Ministry of Finance has updated the corporate tax rules on the treatment of resident and non-resident individuals undertaking a business or business activity. So, all businesses operated by individuals generating a revenue of Dh1 million in an annual year comes under CT.

The decision clarifies the CT regime for natural persons ('individuals' in this context) and ensure that only business or business-related activity income is taxed. Personal income - notably from employment, investments and real-estate (without licensing requirements) - is not subject to corporate tax.

Individuals conducting business or business activities will be subject to corporate tax and registration requirements only if their combined turnover exceeds Dh1 million in a calendar year.

If an individual who is a UAE resident operates an online business and the combined annual turnover from this exceeds Dh1 million, under the new decision, that income would be subject to corporate tax.

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Real estate income

If the UAE resident also earns income from a rental property and personal investments, these sources of income would not be subject to corporate tax as they fall under the out-of-scope categories.

"The new Cabinet Decision demonstrates the UAE's commitment to maintaining a clear and competitive tax framework for both local and foreign individual investors," said Younis Haji Al Khouri, Undersecretary of the Ministry of Finance.