Corporate Tax for Freelancers and Sole Proprietors in the UAE: Rules, Reliefs & Responsibilities

Corporate Tax for Freelancers and Sole Proprietors in the UAE: What You Need to Know

As the UAE embraces a structured corporate tax regime, a growing number of freelancers, consultants, and sole proprietors are asking one important question:

"Does corporate tax apply to me?"

The answer? Yes—under certain conditions. Whether you’re an independent professional, operating under a freelance permit, or managing a sole establishment, understanding your corporate tax obligations is essential to stay compliant and avoid penalties.

At ALWAHAT Accounts and Internal Audit Services, we guide freelancers and sole business owners across Sharjah, Dubai, and Abu Dhabi in navigating the evolving tax landscape with confidence and clarity.

🔍 What Is Corporate Tax in the UAE?

Corporate Tax (CT) is a direct tax on the net profit of businesses operating in the UAE. Introduced in 2023, it is part of the UAE’s move to align with global tax standards while supporting economic diversification.

• Effective Rate: 9%

• Exemption Threshold: AED 375,000 in net profit

• Applicable from: Financial years starting on or after 1 June 2023

👤 Who Is Considered a Freelancer or Sole Proprietor?

A freelancer or sole proprietor in the UAE typically operates under one of the following:

• Freelance permit from a Free Zone (e.g., Dubai Media City, Abu Dhabi Creative Zone)

• Sole Establishment under the mainland Department of Economic Development (DED)

• Individual professional license in services like consulting, IT, education, marketing, content creation, legal advisory, etc.

These individuals often operate independently, without a formal company structure or multiple shareholders—but they may still be subject to corporate tax.

✅ Who Must Register for Corporate Tax?

You must register for corporate tax if:

• Your annual net profit exceeds AED 375,000, and

• You are conducting a business activity as defined by the UAE Ministry of Finance

Even if your income is below the taxable threshold, registration may still be mandatory, depending on the nature of your license and income source.

❌ Who May Be Exempt?

You may be exempt from corporate tax if:

• You do not conduct a licensed business activity (e.g., you earn income from employment or investment, not a trade)

• Your activity is deemed a personal income activity, not a business (e.g., one-off gigs without a license)

• You are a natural person earning gross income below AED 1 million (as per Ministerial Decision No. 73 of 2023)

However, exemptions are not automatic and must be supported by proper documentation and classification.

📄 Do Freelancers and Sole Proprietors Need Audited Financial Statements?

• If your turnover exceeds AED 3 million, you must maintain audited financial statements.

• Even below that threshold, it is strongly recommended to maintain proper books of accounts to substantiate your income, expenses, and tax filing.

At ALWAHAT, we help prepare accurate financial reports tailored to your business size and regulatory needs.

🧾 What Are the Key Compliance Steps?

Here’s what you need to do as a freelancer or sole proprietor under the UAE Corporate Tax law:

1. Register for Corporate Tax via the EmaraTax portal (FTA)

2. Maintain accounting records to support income and deductions

3. Track your annual net profit to monitor if you cross the AED 375,000 threshold

4. File annual corporate tax returns even if your net profit is below the threshold (in some cases, to maintain compliance)

5. Consult a tax advisor for clarity on whether you qualify for small business relief or exemptions

📌 What Happens If You Don’t Comply?

Non-compliance may result in:

• AED 10,000 penalty for failure to register

• Additional fines for inaccurate reporting or late filing

• Suspension or cancellation of business license

• Reputational damage, especially for consultants and professionals

ALWAHAT ensures you remain penalty-free with timely registration, accurate filing, and expert documentation.

🤝 How ALWAHAT Supports Freelancers & Sole Proprietors

At ALWAHAT Accounts and Internal Audit Services, we offer:

• 📋 CT Registration Assistance

• 📑 Bookkeeping & Financial Record Setup

• 🧮 Profit Assessment & Tax Planning

• 🧾 CT Return Filing & Documentation

• 📣 Clarification on Small Business Relief & Free Zone Impact

Whether you’re just starting out or already operating with multiple clients, our experts tailor solutions that fit your scale and budget—while keeping you 100% compliant.

Let’s Simplify Your Tax Compliance

📞 Call Us: +971 50 132 7005
📧 Email: info@alwahataudit.com
🌐 Visit: www.alwahataudit.com

ALWAHAT Accounts and Internal Audit Services – Tax Clarity for Every Entrepreneur.

🔒 Disclaimer:

This blog is intended for informational purposes only and does not constitute legal or financial advice. Corporate tax laws and thresholds may change based on updated regulations by the UAE Ministry of Finance and Federal Tax Authority. Please consult a registered tax advisor or contact ALWAHAT directly for case-specific guidance.