Corporate Tax advice: Should freelancers with income over Dh1 million form a company?

Professionals who earn more than Dh1m annually are subject to UAE corporate tax.

Freelancers and self-employed professionals with high incomes have some UAE Corporate Tax obligations to fulfill. However, a company need not be formed for their operations.

For freelancers and other self-employed professionals in the UAE earning more than Dh1 million a year (or likely to do so), it is not necessary to register their business as a company.

In some circles, it had been suggested that self-employed individuals could benefit from creating a company structure. Particularly if their income and business growth possibilities were showing significant potential, and they were likely to exceed the Dh1 million revenue threshold.

Individual tax payers have not yet been able to register. In the case of businesses, that started on June 1, 2023.

At present, the corporate tax rules only stipulate that such individuals must register once their turnover exceeds Dh1 million between January 2024 and December 2024. 

Several highly successful one-person operations could be run by popular Gulf/Middle East social media influencers, tech professionals, especially those with high-demand categories like AI services. And netting more than Dh1 million in turnover - and Dh375,000 as profit for a year.  

In response to the question of whether these professionals would be better off incorporating as a company, UAE Corporate Tax law does not require them to upgrade to a full-scale business unless otherwise mandated.

In the event that an individual's turnover exceeds Dh1 million, he or she must file their income tax return within nine months from the end of the taxable year.