Business

UAE announces key tax rule update for resident, non-resident entrepreneurs

The Ministry of Finance has increased the tax threshold for business or business activities conducted by individuals

The UAE Ministry of Finance has updated corporate tax rules for resident and non-resident individuals undertaking a business or business activity. The new move is expected to enable the growth of SMEs and startups in the Emirates

Individuals conducting business or business activities will be subject to corporate tax and registration requirements only if their combined turnover exceeds 1 million UAE dirhams ($272,000) in a calendar year, the Ministry of Finance said in an update.

Last year, the UAE introduced corporate tax with a standard statutory rate of 9% for taxable profits up to AED 375,000. Corporate tax on business profits will be effective for financial years starting on or after 1 June 2023.

“For example, if an individual who is a UAE Resident operates an online business and the combined annual turnover from this business exceeds AED1 million, under the new decision, the UAE Resident business income from the online business would be subject to Corporate Tax,”the Ministry of Finance clarified.

“However, if the UAE Resident also earns income from a rental property and personal investments, these sources of income would not be subject to Corporate Tax as they fall under the out-of-scope categories,” it said.

Source
zawya

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