Does the UAE’s new corporate tax apply to freelancers?

Does the UAE’s new corporate tax apply to freelancers?

Under updated regulations, some types of income will be exempted

Published: Thu 10 Feb 2022, 1:46 PM

The UAE has recently announced introducing a federal corporate tax on business profits for the first time starting from 2023.

While the new tax will apply to all UAE businesses and commercial activities, the UAE's Ministry of Finance confirmed that individuals will not be subject to tax on their incomes from employment, real estate, equity investments or other personal income unrelated to a UAE trade or business.

However, with the corporate tax applied to individuals having - or being required to obtain- a business license or permit to carry out the relevant commercial, industrial and/or professional activity in the UAE, how will this impact freelancers?

Mohammad Al Dahbashi, Managing Partner of ADG Legal, said holders of the new freelance permit, issued under the new labour law for self-sponsored expats, should not be subject to corporate tax on their individual earnings.

If freelancers with a business license are sponsored in a free zone and carrying out any activities to other companies, the sponsor will be subject to corporate tax.

He added, "Those freelancing and providing services through a company or a license should not be taxed on the income they generate