The AED 1 million line is drawn on turnover, not profit, and a licence doesn't decide which side you're on.
An individual in the UAE pays no tax on a salary, on personal investments or on rent from their own property. Business income is different. Once your turnover from business activity in the UAE goes over AED 1,000,000 in a calendar year, you must register for Corporate Tax, file returns and keep accounts, whether or not you hold a trade licence. This guide follows Cabinet Decision No. 49 of 2023 and the Federal Tax Authority's guides on natural persons. It also shows something the official texts leave you to work out: for most freelancers the tax itself starts much later than the paperwork.
The rule in one sentence
Article 2(1) of Cabinet Decision No. 49 of 2023 says that business conducted by a resident or non-resident natural person is subject to Corporate Tax "only where the total Turnover derived from such Businesses or Business Activities exceeds AED 1,000,000" within a Gregorian calendar year. Turnover is defined as "the gross amount of income derived during a Gregorian calendar year" (Art. 1). The Decision has been in force since 1 June 2023. The FTA's guide adds that the first calendar year an individual can be taxed for is 2024.
Three words in that rule decide most cases:
- Turnover. The test uses gross income before any costs. A consultant who bills AED 1,050,000 and spends AED 400,000 to earn it is over the line, even though the profit is AED 650,000.
- Total. All your business activities are added together: freelance work, a sole establishment, your share of an unincorporated partnership. You do not get AED 1 million per activity.
- Exceeds. Turnover of exactly AED 1,000,000 is not over the line. AED 1,000,001 is.
A licence does not decide whether you're in business
Many people assume Corporate Tax only reaches licensed activity. The FTA's guide on natural persons (CTGTNP1) says otherwise. Its Example 2 is a man on a visit visa who sets up a workshop restoring antique jewellery and sells AED 1,700,000 of it in a year. He is a Resident Person for Corporate Tax and his business is taxable. The guide adds that residence for Corporate Tax "is not affected by whether immigration, work permit and Business licensing requirements have been correctly dealt with or not."
The test is whether you conduct a Business: "any activity conducted regularly, on an ongoing and independent basis" (Art. 1 of the Corporate Tax Law). The FTA stresses that short-term activity can count too, because the law also covers a single "transaction or activity, or series of transactions". Its examples of things that are not a business are lottery winnings and game-show prizes.
A licence matters in only one place: two of the three exclusions below apply only when the activity is not done through a licence and does not require one.
What is left out, however large
Article 2(2) of the Decision removes three kinds of income from Corporate Tax "regardless of the amount of Turnover". They are also left out when you test the AED 1 million threshold.
| Excluded income | Condition in Cabinet Decision 49 | FTA example |
|---|---|---|
| Wage | Paid to an employee under an employment contract, in cash or in kind, including allowances and bonuses | A salary of AED 300,000 plus AED 150,000 bonus is ignored; only the side business counts (Ex. 16). Board fees are "typically" treated as Wage too (Ex. 10) |
| Personal Investment income | Investment for your own account that is not done through a licence or requiring one, and is not a "commercial business" under the Commercial Transactions Law | Shares bought on a stock exchange with personal savings (Ex. 11); selling your own rare car at a AED 200,000 profit (Ex. 12) |
| Real Estate Investment income | Selling, leasing, sub-leasing or renting land or property in the UAE that is not done through a licence and does not require one | Selling your apartment at a AED 500,000 gain (Ex. 14); AED 1,200,000 a year of rent from several properties (Ex. 15) |
Two details are easy to miss. First, the personal-investment test has two conditions, the property test only one. Personal investment also must not be a "commercial business" under Federal Decree-Law No. 50 of 2022, and that law treats "speculation works practiced by a person, whether or not a trader, for purpose of realising profit" as commercial. The FTA's own contrast is the art buyer in Example 13: someone who buys a UAE artist's works from a home office and sells them abroad through partners for AED 5 million a year is running a business, not investing.
Second, the same law lists "virtual asset works" among activities that are commercial by their nature (Art. 5, reproduced in Annexure 1 of the FTA guide). The FTA's examples cover listed shares, not crypto. Our reading, not an FTA position: an individual who trades virtual assets actively should not assume the personal-investment exclusion applies. Take advice from a registered tax agent before relying on it.
The property exclusion depends only on the licence question. If your activity needs a licence or permit (for example, operating as a licensed real-estate or short-term letting business), the wording no longer covers it. The FTA's guides do not deal with holiday-home permits specifically; if you let property short-term, check your position with a tax agent.
How turnover is added up
For the threshold you count gross income from all your business activities connected to the UAE for the calendar year, measured on an accrual basis unless you use the cash basis. Payments in kind count at market value; the FTA's influencer example includes free products received from brands (Ex. 4).
- Foreign clients of a UAE business count. A consultant based in Dubai who bills a company abroad is doing business in the UAE; the fees are turnover (Ex. 3). So are sessions a UAE physiotherapy practice delivers in other Gulf countries (Ex. 9).
- A separate business abroad does not count. An architect who earns AED 950,000 from a practice at home and AED 100,000 on trips to the UAE has UAE turnover of AED 100,000 and does not register (Ex. 7). If the AED 950,000 were related to the UAE activity, he would be over the line.
- Employment for a foreign company is not your business. An employee who works from the UAE for a foreign employer is not a Taxable Person; the employer may be, if it has a permanent establishment here (Ex. 5).
Crossing AED 1 million: what you owe, year by year
Crossing the threshold does not exempt the first million. The FTA says it directly in Example 3: "there is no exemption for the profit relating to the first AED 1 million of Turnover." What you do get is the ordinary 0% rate on the first AED 375,000 of Taxable Income and 9% above it, applied to the total of all your business profits (Art. 3 of the Corporate Tax Law, Cabinet Decision No. 116 of 2022). You can also elect Small Business Relief if your Revenue (for an individual, the same figure as Turnover) is AED 3,000,000 or less in that year and in every earlier Tax Period. The relief now runs to periods ending on or before 31 December 2029 (our guide).
The table is our own arithmetic, not an official example. It assumes a freelancer whose deductible costs are 30% of turnover and who has never been above AED 3 million:
| Turnover | Taxable Income | Register? | Tax without Small Business Relief | Tax with Small Business Relief |
|---|---|---|---|---|
| AED 950,000 | — | No | 0 | not needed |
| AED 1,050,000 | AED 735,000 | Yes | AED 32,400 | 0 |
| AED 2,500,000 | AED 1,750,000 | Yes | AED 123,750 | 0 |
| AED 3,000,000 | AED 2,100,000 | Yes | AED 155,250 | 0 |
| AED 3,000,001 | AED 2,100,001 | Yes | AED 155,250 | not available, now or later |
Our reading of the table: for an individual who elects the relief, crossing AED 1 million is mainly a compliance threshold: registration, returns, financial statements, records. Tax starts to bite at AED 3 million, and that line is permanent. Article 2(3) of Ministerial Decision No. 73 of 2023 looks at the relevant "or previous" Tax Periods, so one year above AED 3 million ends the relief for good. Electing also has a cost in a loss year, because a loss arising in an electing period cannot be carried forward (losses guide).
Once you're registered, dropping below doesn't let you out
The FTA's guide is explicit on a point that surprises many freelancers. If your turnover falls back under AED 1 million in a later year, you "will retain their Tax Registration status" and must file a nil return within nine months of that year's end. You may deregister only when you have stopped all business activity, and you must apply within three months of stopping (FTA Decision No. 6 of 2023). A deregistration is not approved until every return is filed and every tax and penalty is paid.
Our own observation: registration therefore works as a one-way door. Each year after the first, a return is due by 30 September even when there is nothing to pay, and a late return costs AED 500 a month in the first year of lateness, rising after that, whatever the tax due (deadline guide). Plan for that cost before your turnover first goes over the line.
If you start a new activity after registering, it goes on the same Tax Registration Number and into the same single return. An individual has one registration for everything.
Deadlines for individuals
| Step | Rule | For a year in which turnover first exceeds AED 1M |
|---|---|---|
| Tax Period | The Gregorian calendar year (CTGTNP1, 6.3) | 1 January – 31 December, even if the business started in October |
| Registration, resident | By 31 March of the following year (FTA Decision No. 3 of 2024, Art. 5) | 2025 turnover: by 31 March 2026 · 2026 turnover: by 31 March 2027 |
| Registration, non-resident | Three months from meeting the conditions (same article) | Counted from the date you became subject to tax |
| Tax return and payment | Nine months after the period ends (Arts. 48 and 53 of the Corporate Tax Law) | 2025: by 30 September 2026 · 2026: by 30 September 2027 |
| Late registration | AED 10,000 (Cabinet Decision No. 75 of 2023 as amended, via FTA Decision No. 3 of 2024, Art. 6) | See the waiver note below |
| Records | Kept for 7 years after the end of the period (Art. 56 of the Corporate Tax Law) | Invoices, bank records, expense evidence, contracts |
If 2025 was your first year above AED 1 million, your return was due on 30 September 2026, and from 1 October a return not yet filed costs AED 500 for each month or part of a month. The FTA's waiver of the AED 10,000 late-registration penalty attaches to the first Tax Period and requires that first return within seven months of the period's end; for 2025 that window closed on 31 July 2026. By our arithmetic, someone whose first year above the line is 2026 would need to file that first return by 31 July 2027, if the FTA's initiative is still running then. Registering by 31 March 2027 avoids the penalty altogether.
To register on EmaraTax you need a passport copy, an Emirates ID if you have one, and contact details. Licence details, VAT numbers and bank details are optional at registration (FTA guide CTGRNP1, Table 1). A person already registered for VAT still needs a separate Corporate Tax registration; the number differs from the VAT TRN in its last digit.
Working out the taxable profit
The ordinary rules for deductions apply, with a few points specific to individuals (CTGTNP1, section 4):
- What you pay yourself is not a cost. Article 33(5) disallows amounts a natural person withdraws from the business. The FTA's Example 21: a sole proprietor who books AED 200,000 a year as his own salary gets no deduction for it, "even if the salary would have been an arm's length salary."
- Interest is not capped, but must be for the business. The general interest limitation rule (30% of EBITDA or AED 12 million) does not apply to individuals (Art. 30(6)(c)). Interest on a loan that funded both a home and an office must be split; only the office share is deductible (Ex. 19).
- Mixed-use costs are apportioned on a fair and reasonable basis, as for any business.
- Family deals must be at arm's length. Relatives up to the fourth degree (first cousins included) are Related Parties, counting your spouse's relatives as your own, and so is any company you own or control 50% or more of with them (Arts. 34–35).
Financial statements are prepared for all your taxable activities together. You may use IFRS for SMEs if turnover is AED 50 million or less and the cash basis if it is AED 3 million or less; above AED 50 million the statements must be audited (Ministerial Decisions No. 114 and No. 82 of 2023).
Before you register: four checks
- Separate out wages, investments and your own property income. They never count toward the threshold.
- Add up all business activity for the calendar year, gross and on an accrual basis, including foreign clients of your UAE work and payments in kind.
- Check the three-million history. If any earlier year was over AED 3 million, Small Business Relief is not available.
- Decide whether a company would suit you better. A sole trader's income is taxed in their own name and the registration stays until the business stops. Whether an LLC or a free zone company is better depends on your activity and clients, not on tax alone. That is a question for a registered tax agent.
Frequently asked questions
Do freelancers in the UAE pay corporate tax?
Only if their total turnover from business activity in the UAE exceeds AED 1,000,000 in a calendar year (Cabinet Decision No. 49 of 2023, Art. 2(1)). Below that, a freelancer does not register or pay. Above it, they must register and file, and the whole profit is taxable at 0% up to AED 375,000 and 9% above, unless they elect Small Business Relief.
Is the AED 1 million threshold based on profit or revenue?
Revenue. The Decision uses Turnover, defined as the gross amount of income in a Gregorian calendar year, before any costs. A freelancer billing AED 1,050,000 with AED 400,000 of costs is over the threshold.
Is the first AED 1 million tax-free?
No. The FTA says there is no exemption for the profit relating to the first AED 1 million of turnover. Once over the threshold, all business profit is taxable, with the normal 0% rate on the first AED 375,000 of Taxable Income.
Do I need a trade licence to be taxed?
No. Whether you conduct a business decides it, not whether you hold a licence. The FTA's example of a person on a visit visa running an unlicensed jewellery workshop with AED 1.7 million of sales is taxable. A licence only matters for the personal-investment and real-estate exclusions.
Is my salary counted toward the AED 1 million?
No. Wage, including allowances, bonuses and benefits under an employment contract, is excluded whatever the amount and is not counted for the threshold. Board fees are typically treated as Wage as well, according to the FTA.
Is rental income from my apartments subject to corporate tax?
Not if the letting is not done through a licence and does not require one. The FTA's example of an individual earning AED 1,200,000 a year in rent from several properties is not taxable. Profit on selling your own apartment is also excluded. If your letting requires a licence or permit, the exclusion no longer covers it; check with a tax agent.
Are stock trading or crypto profits taxable for individuals?
Listed shares bought with personal savings are Personal Investment and not taxable, per the FTA. Personal Investment must also not be a commercial business under the Commercial Transactions Law, which lists speculation for profit and virtual asset works as commercial. Active crypto traders should take advice rather than assume the exclusion applies (our reading).
When must an individual register for corporate tax?
A resident individual must register by 31 March of the year after the calendar year in which turnover first exceeded AED 1 million (FTA Decision No. 3 of 2024). A non-resident has three months from meeting the conditions. Late registration carries an AED 10,000 penalty.
Can I deregister if my turnover falls below AED 1 million?
No. The FTA says a registered individual keeps the registration and files nil returns in years below the threshold. Deregistration is possible only when all business activity has stopped, and the application is due within three months of stopping.
Can an individual use Small Business Relief?
Yes, if Revenue is AED 3,000,000 or less in the period and in every earlier period. For an individual, Revenue equals Turnover. The relief is available for periods ending on or before 31 December 2029 after Ministerial Decision No. 131 of 2026. It still requires registration and a return.
Can I deduct the salary I pay myself as a sole trader?
No. Article 33(5) of the Corporate Tax Law disallows amounts withdrawn from the business by a natural person, even if described as a salary and even at an arm's length amount. Salaries paid to employees remain deductible under the normal rules.
Sources
- The AED 1 million test, definitions of Turnover, Wage, Personal Investment and Real Estate Investment — Cabinet Decision No. 49 of 2023 (PDF), Arts. 1–2, Ministry of Finance
- Examples, turnover computation, rates, Small Business Relief, deductions, related parties, registration and deregistration, tax period, accounting, returns, Commercial Transactions Law annex — Corporate Tax Guide: Taxation of Natural Persons, CTGTNP1 (PDF, November 2023), Federal Tax Authority
- Registration documents, separate TRN, record-keeping — Corporate Tax Guide: Registration of Natural Persons, CTGRNP1 (PDF, December 2023), Federal Tax Authority
- Registration deadlines and late registration — FTA Decision No. 3 of 2024 (PDF), Arts. 5–6, Federal Tax Authority
- Rates, withdrawals, interest, related parties, returns, records — Federal Decree-Law No. 47 of 2022 (PDF), Arts. 1, 3, 11, 30, 33–35, 48, 53, 56, Ministry of Finance
- Late-registration penalty — Cabinet Decision No. 75 of 2023 and its amendments (PDF), Ministry of Finance
- Small Business Relief to 2029 — Ministerial Decision No. 131 of 2026 (PDF), Ministry of Finance
- Legislation library — Ministry of Finance · FTA Corporate Tax guides and references
Verified 28 September 2026. On that date we downloaded and read in full Cabinet Decision No. 49 of 2023 from the Ministry of Finance, the FTA's 45-page guide on the taxation of natural persons (CTGTNP1, November 2023, the latest version we could find) and the relevant sections of its guide on registering natural persons (CTGRNP1), and read Articles 5 and 6 of FTA Decision No. 3 of 2024. The Ministry of Finance's legislation list shows no amendment to Cabinet Decision No. 49. Three things here are our own work and are marked where they appear: the turnover table and the point that, with Small Business Relief, the tax cliff for individuals sits at AED 3 million rather than AED 1 million; the reading on virtual assets; and the note that registration works as a one-way door. None of this is advice on your own position; speak to a registered tax agent.
Related
- Corporate tax calculator: the 0% and 9% bands, with Small Business Relief included.
- Small Business Relief, extended to 2029: the AED 3 million test that looks back at every earlier year.
- The 30 September 2026 deadline, now passed: what a late return costs, even with nothing to pay.
- Corporate Tax losses: why a sole trader's losses can't move to a company.