Do Freelancers in UAE need to Pay Corporate Tax?

Corporate tax, also known as business profit tax or corporate income tax. It is a form of direct tax levied on the net profits or earnings of corporate entities and other legal entities involved in business activities. The Ministry of Finance (MOF) has provided a set of significant recommendations. However, they serve as guidelines for the implementation of corporate tax in the UAE, along with the announcement of the new tax regime.

With the exception of resource extraction, all business and commercial activities in the UAE are subject to the UAE’s corporate tax. The Federal Tax Authority (FTA), established in 2016, is responsible for managing, collecting, and enforcing the UAE’s corporate tax system. On December 9, 2022, the UAE introduced a federal decree on corporate and company taxation, setting a 9% tax rate on taxable profits exceeding AED 375,000 ($102,000). Profits below AED 375,000 are therefore taxed at 0%, in line with the government’s efforts to support startups and small to medium-sized businesses.

Note

It’s important to note that freelancers in the UAE and other self-employed independent contractors are also subject to the corporate tax. However, regime if their income surpasses the AED 375,000 threshold. However, there are specific scenarios that apply to freelancers regarding corporate tax: