Natural Person

Residency Criteria:

■ They live and have their main financial and personal interests in the UAE.
■ They are physically present in the UAE for 183 days or more in a 12-month period.
■They are physically present in the UAE for 90 days or more in a 12-month period, are a UAE national or resident, and have either a permanent home or are employed or running a business in the UAE.

Tax Residency Certificate:

If a person meets the above criteria, they can apply to the tax authority for a Tax Residency Certificate, which confirms their tax resident status.

“Natural Person” is an individual:

■ subject to Corporate Tax if they run a business or business activity in the UAE.

Types of Business Activities for Natural Persons:

■They can set up:
o Sole establishments
o Civil companies

■ Sole establishments and civil companies are treated as the natural person(s) owning them for tax purposes due to direct control and unlimited liability.

No tax on personal investments, salaries, wages, or real estate investments.

Tax applies to licensed real estate activities, licensed investment activities, and other business activities.

Tax Relief:

■ Turnover up to AED 1 million: No CT registration required.

■ Turnover between AED 1 million and AED 3 million: CT registration required, small business relief available.

■ Turnover above AED 3 million: CT registration required, taxable income calculated, and tax payable at 9% if taxable income exceeds AED 375,000.

Example 2:

Mr. X lives in Dubai, where his main financial and personal interests are located. He has spent 200 days in the UAE over the past 12 months.He owns a small business in Dubai, which had a total turnover of AED 2.5 million in the past year.

Analysis & Interpretation:Mr.X is considered a tax resident in the UAE because:
■He lives in Dubai and his main financial and personal interests are located there.
■He has spent more than 183 day in the UAE over the past 12 months.
■ As a UAE national, he meets the criteria for tax residency based on his physical presence and the location of his financial interests.

♧ Corporate Tax Registration■ Since his turnover exceeds AED 1 m, he must register for Corporate Tax.
■ He is eligible to claim SBR due to the turnover range.

Example 3:

Mr. Y is a tax resident in the state, and his business had a total turnover of AED 5 million. His taxable income is AED 450,000. Calculate the Corporate Tax (CT) he needs to pay. Can he avail SBR or any other relief under CT?

Analysis& Interpretation:
To calculate the CT payable:
■ Taxable Income: AED 450,000
■ Tax-Free Threshold: AED 375,000
■ Taxable Amount Over Threshold: AED 450,000 – AED 375,000 = AED 75,000
■ CT payable is 9% of AED 75,000=AED 6,750.

Relief: Since turnover exceeds AED 3 m, he does not qualify SBR but he can avail himself of the tax-free threshold of AED 375,000