Who is exempt from corporate tax in the UAE?

Abu Dhabi: The United Arab Emirates (UAE) Finance Ministry on Wednesday clarified rules on who should and should not pay corporate tax in the country.

Business owners in the country will only be required to pay corporate tax if their turnover exceeds Dh1 million in a calendar year, the Ministry of Finance said.

Cabinet Decision (49) of 2023 aims to clarify the application of the corporate tax regime to residents and non-residents and “ensure that only income from business or business-related activities is taxed”.

It also recognizes that personal income, particularly from employment, investments and real estate (no licensing requirement), is exempt from corporate tax.

For example, if a UAE resident runs an online business and the total annual turnover of that business exceeds AED 1 million, this income will be subject to corporate tax under the new decision.

However, if residents also receive income from rental properties and personal investments, these sources of income will not be taxed as they fall under the out-of-scope category, the ministry said.

“The new Cabinet decision demonstrates the UAE’s commitment to maintaining a clear and competitive tax framework for local and foreign individual investors,” said Deputy Finance Minister Younis Haji Al Khouri.