UAE Corporate Tax: Will freelancers, influencers meet March 31 registration deadline?

Dubai: Freelance professionals and social media influencers in the UAE have one deadline at the top of their to-do list – make sure they are registered for corporate tax before or by March 31.

Based on what tax auditors are saying, many of these single individual businesses could end up doing a rush job to meet the tax deadline. And potentially, end up making mistakes in their submissions. But the most important thing – for now – is to get themselves registered. (Failure will invite a penalty of Dh10,000.)

Social media influencers in particular need to be clear about where they stand on tax obligations. “Such freelancers’ taxability includes income from brand partnerships, sponsorships, advertisements, and other monetized activities related to their social media presence,” said Atik Munshi, Managing Partner at Finexpertiza UAE, the consultancy.  

“The turnover in such cases could include ‘in-kind’ payments, which are valued at market rates. If a freelancer gets a fully paid vacation from a sponsoring brand, the value of such vacation would be taxable.”

Don’t forget this detail, because the way social media influencer payments are structured, it’s not always a straight cash transaction.

"This is where most freelancers are getting it wrong," said a tax consultant. "Many influencers are going through their contracts to fix a value to what they had received in kind. This is where many would get things wrong.

"And leading to panic..."

The UAE’s corporate tax mandate is pretty straight forward for single person run businesses, i.e., freelancers, social media influencers and the like.

If the person has a business or business activity in the UAE and the revenue during 2024 exceeded Dh1 million by July 31, 2024, they are required to submit an application to register for corporate tax not later than March 31, 2025. And submit their 2024 corporate tax return for 2024 before or by September 30, 2025. (This is the same deadline for 2024 tax returns that the majority of UAE business establishments meeting the profit threshold for corporate tax must do.)

If the individual is holding multiple ‘sole establishment’ licenses, the turnover from all these licenses is combined to determine if the threshold for corporate tax registration is met.

‘Unincorporated partnerships’

Freelance professionals should also take note of if they have partnered any other individual to do a business in the UAE.

In such cases, ‘each partner is typically treated as a separate taxable entity for corporate tax purposes,” said Munshi.

“Each partner is then taxed on their share of that partnership's income, subject to the turnover threshold conditions. This taxation occurs at the individual partner's level, taking into account their share of partnership income as well as any other business income they may have.”

Partners in an unincorporated partnership can apply to the FTA to have the venture treated as a taxable entity.

If approved, the partnership's income will then be taxed at the partnership level, rather than at the individual partner level.

“If the unincorporated partnership is taxed at the partnership level, the partner must assess if they have any other business activities subject to corporate tax,” said Munshi. “If not, they would only be subject to corporate tax through the partnership.”