A freelancer or sole establishment owner in the UAE falls under corporate tax only when business turnover goes above AED 1 million in a calendar year. Salary, personal investments and personal property rent do not count. Above the threshold you register by 31 March of the next year and pay 9% on profit above AED 375,000.
Does corporate tax apply to me?
Only if the turnover from your business activities is more than AED 1,000,000 in a calendar year (Cabinet Decision No. 49 of 2023). That covers freelance permit holders, sole establishments and anyone trading in their own name. Turnover means total sales, not profit: a designer who invoices AED 1.1 million and keeps AED 300,000 after costs is over the threshold.
Income from these sources does not count toward the AED 1 million (Ministry of Finance):
- Salary from employment.
- Personal investment income, such as dividends and gains on shares held privately.
- Rent from property you own personally, where no licence is needed.
When do I register?
By 31 March of the year after the year in which turnover passed AED 1 million (PwC summary of FTA Decision No. 3 of 2024). If you crossed the line during 2026, register by 31 March 2027. A late registration costs AED 10,000 (Ministry of Finance).
“Exceeds AED 1,000,000 (one million United Arab Emirates dirhams).”
How much tax will I pay?
Corporate tax is 0% on taxable income up to AED 375,000 and 9% above it (Cabinet Decision No. 116 of 2022). Tax is charged on profit, after business expenses, not on turnover. Your tax period is the calendar year, and the return is due 9 months later, so by 30 September (Federal Tax Authority).
If turnover is between AED 1 million and AED 3 million, Small Business Relief can reduce the tax to zero for periods ending by 31 December 2029 (Ministry of Finance via WAM). You still register, keep records and file.
What records should I keep?
Separate business records from personal spending from the start: a dedicated bank account, numbered invoices, and receipts for every business expense. Keep them for 7 years (Finance Middle East on FTA guidance). Cash accounting is allowed where revenue is AED 3 million or less (DLA Piper summary of Ministerial Decision No. 114 of 2023), which keeps bookkeeping simple for most freelancers.
Our bookkeeping service sets this up and files the return for you.
Frequently asked questions
I am employed and freelance on the side. Does my salary count?
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No. Only business turnover counts toward the AED 1 million threshold. Salary is excluded.
I rent out an apartment I own. Is that taxable?
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Not under corporate tax, where you hold it personally and no licence is required for the activity.
Do I need VAT registration too?
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Possibly. VAT has its own threshold of AED 375,000 of taxable supplies in 12 months, which many freelancers reach long before AED 1 million.
Is a sole establishment a company?
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No. It is owned by an individual, so the natural person rules and the AED 1 million threshold apply.
Sources
- Cabinet Decision No. 49 of 2023 on business activities of natural persons subject to Corporate Tax (AED 1,000,000 turnover) — UAE Ministry of Finance. Checked 23 October 2026.
- UAE Corporate Tax: FTA Decision No. 3 of 2024 on registration timelines — PwC Middle East. Checked 23 October 2026.
- AED10,000 Penalty for Late Corporate Tax Registration (Cabinet Decision No. 10 of 2024) — UAE Ministry of Finance, 27 February 2024. Checked 16 October 2026.
- Cabinet Decision No. 116 of 2022 on the annual Taxable Income subject to Corporate Tax (AED 375,000) — UAE Ministry of Finance. Checked 16 October 2026.
- FTA emphasises the need to submit tax returns and settle Corporate Tax payable within specified deadlines to avoid late payment penalties — Federal Tax Authority, 14 September 2025. Checked 23 October 2026.
- Ministry of Finance extends Small Business Relief to tax periods ending on or before 31 December 2029 (Ministerial Decision No. 131) — WAM via Aletihad, 7 August 2026. Checked 16 October 2026.
- FTA orders seven-year corporate tax record retention, sets nine-month filing deadline — Finance Middle East. Checked 17 October 2026.
- Ministerial Decision No. 114 of 2023 on accounting standards and methods (IFRS, IFRS for SMEs, cash basis) — DLA Piper. Checked 23 October 2026.