UAE Corporate Tax: New update offers wide scope on investments made by individuals doing business

UAE Corporate Tax: New update offers wide scope on investments made by individuals doing business

Since the announcement of UAE Corporate Tax on January 31, 2022, it has been a gradual realisation that this is not just on big corporations but also on individual-managed businesses. ‘Natural persons’ conducting a business or activity in the UAE could be subject to CT - UAE residents and non-UAE residents alike, irrespective of their tax residency status. The categories of business or business activity conducted by a natural person subject to corporate tax have been specified through a cabinet decision last week. It would not be an understatement to say the decision has been a huge respite to anxious individuals, especially investors. It is still important to understand the tax implications and the critical scenarios that could give rise to a tax liability. The corporate tax will be applicable only where the total turnover derived (by individuals) from the business/activity exceeds Dh1 million within a calendar year. The turnover means the consolidated gross amount of income/revenue from all business\activities without deduction of expenses (i.e., not the profit). As the taxability is dependent on the turnover threshold, one does not need to figure out the nature of a particular business/activity to determine taxability. To illustrate, a freelancer, a social media