The UAE Cabinet of Ministers has issued Cabinet Decision No. (49) of 2023 specifies the categories of businesses or business activities conducted by a resident or non-resident natural person subject to corporate tax.
The decision defines "turnover" as the gross income derived during a Gregorian calendar year. It also defines "wage" as the wage given to an employee in consideration of their services under the employment contract, whether in cash or in kind, payable annually, monthly, weekly, daily, hourly, or piecemeal.
According to the decision:-
- "Personal Investment" is defined as investment activity that a natural person conducts for their personal account that is neither conducted through a license nor requires a license from a licensing authority in the state nor considered as a commercial business in accordance with the Federal Decree-Law No. 50 of 2022.
- "Real Estate Investment" is defined as any investment activity conducted by a natural person related to, directly or indirectly, the sale, leasing, sub-leasing, and renting of land or real estate property in the state that is not conducted or does not require to be conducted through a license from a licensing authority.
For the purposes of Clause (6) of Article (11) of the Corporate Tax Law, the decision states that:-
- Businesses or business activities conducted by a resident or non-resident natural person shall be subject to corporate tax only where the total turnover from such businesses or business activities exceeds AED 1,000,000 (one million United Arab Emirates dirhams) within a Gregorian calendar year.
- However, notwithstanding Clause (1) of this Article, activities that give rise to wage, personal investment income, or real estate investment income shall not be considered as businesses or business activities conducted by a resident or non-resident natural person subject to corporate tax, regardless of the amount of turnover derived from such activities.
- Finally, the decision clarifies that a natural person not conducting a business or business activities subject to corporate tax in accordance with this Article shall not be required to register for corporate tax. The Minister of Finance may issue the necessary decisions to implement the provisions of this decision. This decision shall be published in the Official Gazette and shall come into effect on June 1, 2023.
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