UAE Corporate Tax – Taxation of income of Individuals under UAE Corporate Tax shall depend on the nature of income, i.e, whether it is Business income or Income-Other than business Income
| Taxability of Individual | Exempt from UAE Corporate Tax, except for business income |
| Exempt income | Capital gains , Dividends, Employment income, interest and other income from bank deposits or savings are exempt from Corporate Tax |
| Taxable Income | Income from business or commercial activity, or share of profit of business carried by unincorporated partnership |
| Unincorporated Partnership profits | Taxable in hands of individuals |
The taxation of various types of income earned by Individuals is discussed in detail as under : –
Income – Other than Business Income
There would be no tax on the income of individuals , except business income under the UAE Corporate Tax. Accordingly, the following income earned by UAE and foreign individuals will be exempt : –
- Employment income
- Dividends,
- Rental receipts from UAE real estate investments ; and
- Other investment income.
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Income – Business Income
Since Corporates and legal persons, carrying out business in the UAE, are subject to corporate tax, if individuals, who carry out business in the UAE are not subjected to corporate tax, the legal person would be under a comparative disadvantage. In view of this, and to provide a level playing field, the UAE corporate tax is proposed to be applied to the following individuals who carry out any business for commercial activity : –
- Sole establishments ; or
- Proprietorships ; and
- Individual partners in an unincorporated partnership that conducts business in the UAE
Income of private or family trust on behalf of beneficiaries that are natural persons
The treatment mentioned above shall also apply where UAE real estate and other investments are held through a private or family trust , where the beneficiaries are natural persons.
UAE Corporate Tax Public Consultation Document
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