Corporate Tax in UAE for Freelancers

The UAE has always attracted freelancers from around the world. The lifestyle is flexible, the visa process is simple, and until recently, taxes weren’t something to worry about. But with the introduction of corporate tax, many freelancers are now unsure about their responsibilities and reach out to corporate tax agents in Dubai. Missed registration deadlines, inaccurate tax filings, or thinking you’re exempt when you’re not; these can result in penalties.

This article explains straightforwardly how corporate tax applies to freelancers in the UAE. Meanwhile, individuals and foreigners working in the UAE can consult Tax Gian experts and seek guidance on whether or not they fall under the scope of CT.

If you’re freelancing without a freelance license or a natural person carrying out business activity, you are not required to register for corporate tax in the UAE if your annual turnover does not exceed the 1 million AED threshold. The UAE government does not tax personal income, such as salaries or money from part-time work, unless it’s linked to a business activity.

But if your freelance work is steady, and clients pay you often, i.e., turnover exceeds the threshold, the government may consider it a business even if you don’t have a license. As a result, you will need to register and pay corporate tax.

You can ask expert tax agents in Dubai whether or not you fall under the scope of CT.

Freelancers With a License or Permit

If you already have a freelance license, primarily through a Free Zone, and you provide services as a business, then corporate tax applies. However, there’s an important detail: some Free Zones offer tax-free incentives. If you are based in a Free Zone, you must check your agreement to see if you are exempt. 

What Income of a Freelancer is Taxed in the UAE?

In a nutshell;

• The annual income of a CT-registered freelancer in the UAE is taxed at a 0% rate if it remains below or equal to the 375,000 Dirhams threshold.
• The annual income of a CT-registered freelancer in the UAE is taxed at a 9% rate if it goes beyond the 375,000 Dirhams threshold. 

When does a freelancer need to register for corporate tax in the UAE?

In a nutshell;

• If you are having freelance license, then irrespective of turnover or income, register for corporate tax.
• If the annual turnover of a freelancer (without license) exceeds the threshold of 1 million AED, the freelancer has to register for corporate tax.
• If the annual turnover of a freelancer  (without license) does not exceed 1 million AED in total, there is no need to register or pay corporate tax in the UAE.

Freelancers in Free Zones: What You Should Know?

Many freelancers in the UAE work under Free Zone licenses. These Free Zones often come with tax exemptions.

But you need to be careful. If you offer services to businesses outside your Free Zone, or if your Free Zone doesn’t fall under an approved exemption, you might still owe tax.

Always check with your Free Zone authority or corporate tax consultants in the UAE to know where you stand.

No Personal Income Tax in UAE

It’s important to note that the UAE still does not have personal income tax. If you are employed and earn a salary, you don’t pay tax on that. The corporate tax only applies if you run a business or offer services in a professional capacity.

But if you live in another country and work remotely from the UAE, your home country might still require you to declare that income. Always check your country’s tax rules.

Benefits of Freelancing in the UAE

Even with the new tax rules, the UAE remains attractive for freelancers. Here’s why:

• No need for a local sponsor – You can work independently.
• Simple visa process – Getting a freelance visa is easier than many other types.
• Work from anywhere – No office needed.
• Sponsor your family – Your freelance visa lets you bring them with you.
• Lower tax rate – The 9% corporate tax is still low compared to most countries.
• Plenty of projects – The UAE market is active and constantly growing.

Smart Tax Management Tips for Freelancers

To stay on the right side of the rules:

• Track all your income and expenses. Use spreadsheets or software which are easily available these days.
• Keep all invoices and receipts. This helps if you’re ever audited.
• Know your business setup. Free Zone or not? License or freelance permit? This affects your tax status.
• Get professional advice. If unsure, talk to a tax consultant in Dubai. It could save you trouble later.

How can Tax Gian Help?

Corporate tax is now a reality for many freelancers in the UAE. But that doesn’t mean freelancing here has become difficult or expensive. With the right support of a corporate tax consultant in the UAE, you can achieve good planning and a clear understanding of your liabilities. This allows you to enjoy the freedom of freelancing without getting into tax trouble.

Need help figuring out your tax status as a freelancer in the UAE? Let Tax Gian experts simplify it for you.