The introduction of the UAE’s corporate tax regime has raised many questions among freelancers and sole proprietors, particularly those operating in the digital economy or offering services independently. In 2024 and early 2025, the Federal Tax Authority (FTA) issued important clarifications regarding the corporate tax obligations of natural persons, including freelancers and individuals operating unincorporated businesses.

Here’s a clear breakdown of what freelancers and sole proprietors need to know to stay compliant with corporate tax regulations in the UAE.

📅 Who Needs to Register?

According to the FTA, natural persons—such as freelancers, consultants, influencers, and individual professionals—are subject to corporate tax only if their annual business income exceeds AED 1 million.

This means:

• If your total gross revenue from business activities is more than AED 1 million in a calendar year, you must register for corporate tax.
• If your income is below AED 1 million, you are not required to register or pay corporate tax.

⚠️ Important: Personal income such as salaries, investment income, or real estate income (in personal capacity) is not subject to corporate tax.

👥 Who is Considered a Natural Person in Business?

Natural persons under corporate tax law include:

• Freelancers offering services independently (e.g., graphic design, marketing, IT consulting)
• Sole proprietors under trade licenses
• Influencers and content creators earning through brand partnerships
• Trainers, coaches, or consultants charging clients

If you are conducting any ongoing, revenue-generating activity on your own, you may fall under this category.

💳 What Tax Rate Applies?

• The standard corporate tax rate is 9% on taxable income exceeding AED 375,000.
• Income up to AED 375,000 is subject to 0% corporate tax.
• Income from non-business sources (like employment or dividends) is fully exempt.

⏱ Key Dates to Remember

For the 2024 tax year:

• If your freelance or sole proprietorship income exceeds AED 1 million during Jan–Dec 2024, you must register by 31 March 2025.
• Your first corporate tax return will be due nine months after the end of your financial year (typically 30 September 2025 if using a calendar year).

📊 Required Documentation

To register and file, freelancers must prepare:

• Emirates ID and passport copy
• Trade license (if applicable)
• Summary of income and expenses
• Valid UAE bank account records
• Any contracts or invoices supporting business activity

✅ Tips to Stay Compliant

1. Track all income and expenses related to your freelance or business activity.
2. Open a separate bank account for your business activities to simplify bookkeeping.
3. Keep contracts and invoices for all clients and services provided.
4. Use accounting software or a tax consultant to calculate taxable income accurately.
5. Register early on the EmaraTax portal to avoid last-minute issues or penalties.

🌐 Final Thoughts

The FTA’s clarification provides much-needed certainty for UAE-based freelancers and sole proprietors. As the UAE moves towards a more structured tax environment, it’s essential to assess whether your income crosses the AED 1 million threshold and take timely action.

Understanding your corporate tax obligations isn’t just about compliance—it’s about running your freelance business with professionalism, credibility, and future readiness.

If you’re unsure about how the new tax regime applies to you, consider consulting a UAE tax expert to guide you through the process.