Corporate Tax News Alert on Business Activities carried out by Natural Persons
18 May 2023
A Cabinet Decision No (49) of 2023 has been issued which provides that individual taxpayers (resident or non-resident) shall be liable to pay corporate tax only if their turnover from business exceeds AED 1,000,000.
The following income generating activities will be out of corporate tax scope:
- Wage/salaries from employment.
- Personal investments for which no commercial or trade license is required.
- Real Estate investments (the sale, leasing, sub-leasing and renting of land or property) for which no commercial or trade license is required.
The Decision also clarifies that an individual not doing business shall not be required to register for corporate tax.
BDO comment:
This is the second recent announcement of a relief for smaller enterprises. An earlier decision issued by the MOF, confirmed that small businesses (individuals as well as entities) with revenue of less than AED 3 million in the current and previous tax periods shall be treated as having no taxable income during the relevant tax period. Now, this decision provides clarity to individuals with very small businesses in the UAE and even exempts them from corporate tax registration.
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