Abu Dhabi: The United Arab Emirates (UAE) Ministry of Finance on Wednesday clarified rules on who should and should not pay corporate tax in the country.
The ministry of finance has said that the business owners in the country will be subject to corporate tax only if their turnover in a calendar year exceeds one million Dirhams.
Cabinet Decision No. (49) of 2023 aims to clarify the application of the corporate tax regime for residents and non-residents and “ensure that only business or business-related activity income is taxed”.
It also confirmed that personal income, particularly from employment, investments and real estate (without licensing requirements) is not subject to corporate tax.
For example, if a UAE resident operates an online business and the combined annual turnover of the business exceeds one million dirhams, under the new decision, that income will be subject to corporate tax.
However, if the resident also earns income from a rental property and personal investments, these sources of income will not be subject to the tax as they fall under the out-of-scope categories, the ministry said.
“The new Cabinet Decision demonstrates the UAE’s commitment to maintaining a clear and competitive tax framework for both local and foreign individual investors,” said Younis Haji Al Khouri, Undersecretary of the Ministry of Finance.
