Corporate Tax in the UAE: What Every Investor and Professional Should Know

On June 1, 2025, the UAE Ministry of Finance introduced a major update to its corporate tax regime, expanding the scope of the 9% corporate tax to cover more self-employed individuals and sole proprietors.

This move, following Federal Decree-Law No. 47 of 2022, is part of the UAE’s strategy to diversify non-oil revenues and align with international tax standards.

Who Needs to Register?

The new rules apply to a wider range of individuals conducting business activities in the UAE, including:

• Freelancers & Sole Proprietors
  Any UAE resident earning over AED 1 million annually through commercial, industrial, or professional activities must register for corporate tax even if not formally established as a company.

• Property Owners
  Rental income in a personal capacity remains exempt, provided it is not linked to a licensed business activity.

• Investors
  Dividends, capital gains, and personal share trading activities are not subject to corporate tax.

• Non-Residents
  Only taxable if they have a permanent establishment or generate UAE-sourced income above the AED 1 million threshold.

What This Means for Professionals & Small Businesses

This update is a turning point for the UAE’s fast-growing freelance and SME sector. Many professionals, particularly in marketing, IT, consulting, education, and creative industries, are now required to:

• Register with the Federal Tax Authority (FTA) if revenues exceed AED 1 million.

• File annual corporate tax returns.

• Maintain proper financial records and audits, even as individuals.

For many, this is the first time they are formally brought under corporate-level compliance in the UAE.

Why This Matters for the UAE Economy

• Strengthens fiscal sustainability by reducing reliance on oil revenues.

• Keeps the UAE competitive globally with one of the lowest corporate tax rates at 9%.

• Enhances transparency and alignment with OECD global minimum tax principles.

• Signals the maturing of the UAE’s economy, where freelancers and entrepreneurs are integral to long-term growth.

Key Takeaways for Investors & Entrepreneurs

• The AED 1 million turnover threshold protects micro-businesses and early-stage freelancers.

• Strategic tax planning such as leveraging free zone structures may help optimize exposure.

• Those below the threshold are not required to register, but the responsibility to assess compliance rests with the taxpayer.