UAE fz / Dubai freelance - corp tax?

[gnud]

Hey everyone.

By now UAE fz CT regulations should be well clarified. So how is it with the corporate tax and fz freelancers doing business with companies outside of the UAE? I keep finding old articles from the last year on google saying freelancers have an obligation to pay the corporate tax if their income is over 375k AED. Is it true? Aren't fz freelancers who don't do business with the mainland exempt?

 

[Don]

The new 9% corporate tax applies to individuals based in the UAE who offer consultancy, freelance, or other business services to local and international businesses and generate an annual income of AED 1 million or more with at least Dh375,000 profits on that income. Under UAE corporate tax, the 9 per cent applies to those businesses that exceed Dh375,000 in profit over a year. That means a freelancer will be able to benefit from the 0 per cent rate on the first Dh375,000 of taxable income.

 

[gnud]

Don said:
The new 9% corporate tax applies to individuals based in the UAE who offer consultancy, freelance, or other business services to local and international businesses and generate an annual income of AED 1 million or more with at least Dh375,000 profits on that income. Under UAE corporate tax, the 9 per cent applies to those businesses that exceed Dh375,000 in profit over a year. That means a freelancer will be able to benefit from the 0 per cent rate on the first Dh375,000 of taxable income.
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Thanks! So there's no exemption if the freelancer does business only with companies outside of the UAE?

 

[Don]

gnud said:
Thanks! So there's no exemption if the freelancer does business only with companies outside of the UAE?
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Yes.., there is no exemption.. however, you can possibly apply for small business relief to get an exemption of up to 3M AED (until the end of 2026).

An unincorporated partnership structure can be interesting since below 1M AED/year is exempt from any registration in UAE.

 

[Modenaa]

Don said:
The new 9% corporate tax applies to individuals based in the UAE who offer consultancy, freelance, or other business services to local and international businesses and generate an annual income of AED 1 million or more with at least Dh375,000 profits on that income. Under UAE corporate tax, the 9 per cent applies to those businesses that exceed Dh375,000 in profit over a year. That means a freelancer will be able to benefit from the 0 per cent rate on the first Dh375,000 of taxable income.
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Hello, is there an obligation to register for CT if the revenue is < 1 million AED? Or should ANY freelance person register and make a declaration?

Also, I need clarification regarding the 2 thresholds (1 million income and 375k profits).

Which statement is correct?
1. If income < 1 million, then no tax;
2. if income < 1 million AND profits < 375k then no tax.

I understand that:
- a business with 1 million annual revenue and 200k profit with will pay 0;
- a business with 1 million annual revenue and 600k profit with will pay 9% * (600 000 - 375 000).
But what about a business with 800k annual revenue and 500k profit?

Thanks a lot!

 

[0xDEADBEEF]

Modenaa said:
Hello, is there an obligation to register for CT if the revenue is < 1 million AED? Or should ANY freelance person register and make a declaration?
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Yes, registration is mandatory. Regardless of when you have established your company, you should register for CT ASAP.

Modenaa said:
Which statement is correct?
1. If income < 1 million, then no tax;
2. if income < 1 million AND profits < 375k then no tax.
Click to expand...

You qualify for small business relief, which means you pay 0% until end of 2026 if your revenue is below 3m AED. Otherwise, you would indeed have to pay 9% after removing the 375k exemption from your profits. If you have not registered for CT, it would be wise to do it before the fines start coming in. Afterwards you can apply for fhe relief.

Last edited: Jun 23, 2024

 

[Nomado]

0xDEADBEEF said:
If you have not registered for CT and have not applied for the relief, it would be wise to do it before the fines start coming in.
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Additional question, how do you apply for the relief ?
I am registered for CT but didn't know you have to apply for the small business relief on the side...

 

[0xDEADBEEF]

Nomado said:
Additional question, how do you apply for the relief ?
I am registered for CT but didn't know you have to apply for the small business relief on the side...
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Just double checked with someone, it seems that the relief should be applied for when filing your taxes. So, my apologies for the confusion.

My info was not up to date, I have recently done the registration and was asked to wait on additional pointers from 'my guy'.

 

[Nomado]

Thank you for the clarification.

 

[Modenaa]

And let's forget for a second the exceptions to the rule (which is that businesses have to pay taxes when revenue > 1m and/or profit > 375k).

What about a business with 800k annual revenue and 500k profit?
Should such a business not pay taxes because below $1m revenue threshold, or should it pay 9% * (500k - 375k)?