The UAE Federal Tax Authority (‘FTA’) has released the Corporate Tax Guide on Taxation of Natural Persons under the UAE Corporate Tax Law, covering:
- When the Corporate Tax applies to natural persons
- The calculation of Corporate Tax for natural persons
- Interactions with other businesses
- Corporate Tax compliance for natural persons
The Corporate Tax Guide provides key considerations in determining whether a natural person should be subject to Corporate Tax:
- A natural person who conducts a Business or Business Activity in the UAE is considered a Taxable Person and a Resident Person as defined in the Corporate Tax Law. In this regard, the Guide provides a comprehensive explanation on what Business Activity means for Corporate Tax purposes and comments on where an income is considered related to the Business or Business Activity performed within the UAE.
- A natural person is subject to Corporate Tax on their Business or Business Activity only where the total turnover derived from the Business or Business Activities conducted in the UAE exceeds AED 1 million within a Gregorian calendar year. The income from specific activities - wage, personal investment income or real estate income - is not subject to Corporate Tax and will not be taken into account to compute the AED 1 million threshold regarding the income obtained from a Business or Business Activity. The Guide has included different examples and scenarios where wage, personal investment and real estate income can be obtained.
- Where the total turnover exceeds AED 1 million, natural persons (residents and non-residents) are required to comply with the obligations of the Corporate Tax Law which include Corporate Tax registration, submission of Corporate Tax returns and paying Corporate Tax, where applicable.
Further, the Corporate Tax Guide provides several examples and comments on the following items:
- Different scenarios of natural persons working in the UAE
- Natural persons who are present in the UAE and are engaged in different types of businesses such as selling artworks, influencers, practicing as physiotherapist, etc.
- Corporate Tax calculations
- Transactions with related parties and connected persons
- Corporate Tax compliance (i.e. tax registration)
These examples provide more clarity on the Corporate Tax mechanisms relevant to natural persons who are engaged in different types of Businesses and Business Activities.
The Guide is not legally binding, it will be a source of guidance for better understanding the main instances where Corporate Tax would be applicable to natural persons and their respective Corporate Tax obligations.
KPMG has a dedicated Corporate Tax team that will be delighted to help you assess the impact of Corporate Tax in your operations and activities.