CORPORATE TAX: FAQs FOR INDIVIDUAL ENTREPRENEURS AND FREELANCERS IN THE UAE

Corporate Tax applies to income earned from activities classified as business or professional activities under UAE law. This includes consulting, freelancing in technology, creative services, and other income-generating activities. 

Freelancers with an annual turnover exceeding AED 1 million equired to register for Corporate Tax in the UAE. 

Freelancers earning below the taxable revenue threshold are not subject to Corporate Tax. Additionally, certain categories of income, such as dividends and capital gains from qualifying investments, may be exempt. 

Yes, freelancers earning income above the turnover threshold must register with the Federal Tax Authority (FTA) and file an annual Corporate Tax return. 

Yes, freelancers can deduct expenses incurred wholly and exclusively for their business activities, such as office rent, software subscriptions, marketing expenses, and professional fees. 

Yes, the UAE offers simplified compliance and filing requirements for individual entrepreneurs and freelancers who meet the criteria for Small Business Relief. 
This provision is designed to ease the tax burden and administrative obligations for eligible small businesses, making Corporate Tax compliance more manageable and cost-effective.  

Income earned from overseas clients is subject to Corporate Tax if the freelancer is operating as a UAE resident and the income is considered part of their business activities in UAE. 

Part-time freelancers are subject to Corporate Tax if their income exceeds 1 million during a calendar year. 

Freelancers must maintain accurate records of their income, expenses, contracts, and financial transactions to ensure compliance with Corporate Tax regulations. 

No, freelancers operating in Free Zones are not eligible for the 0% Corporate Tax rate available under the Free Zone tax regime. 

This preferential regime is specifically applicable to juridical persons (i.e., companies or legal entities) that are incorporated, registered, and operating in Qualifying Free Zones, provided they meet the prescribed conditions. Since freelancers are treated as natural persons under the UAE Corporate Tax Law, they fall outside the scope of this regime and are instead taxed in accordance with the general rules applicable to individuals conducting business. 

However, under the standard Corporate Tax regime, freelancers with taxable income not exceeding AED 375,000 annually will be subject to a 0% tax rate, in line with the threshold exemption provided for all taxable persons.  

Yes, freelancers can carry forward business losses to offset against future taxable income, subject to certain conditions outlined in the Corporate Tax law. However, if the freelancer had opted to be considered as a small business, the loss offset against future income rule will not apply. 

In most cases, freelancers are not required to prepare audited financial statements unless their business size or nature warrants it. However, maintaining accurate financial records is mandatory. 

Yes, penalties may apply for late registration, failure to file tax returns, underreporting income, or failing to pay taxes on time. 

Freelancers should: 

• Register with the FTA if their income exceeds the taxable threshold. 

• Keep accurate and detailed financial records. 

• Consult a tax professional for guidance on compliance and deductions. 

Freelancers can access resources and support from the Federal Tax Authority, tax consultants, and accounting professionals to ensure compliance and optimize their tax obligations.