Under the corporate tax laws in the UAE, any taxable income surpassing AED 375,000 is subject to Corporate Tax. This taxation framework also encompasses freelancers and independent contractors in the UAE who are self-employed, provided their income exceeds the AED 375,000 threshold.
The UAE's Corporate Tax system is extended to freelancers and other independent contractors who operate autonomously once their income surpasses the AED 375,000 limit. According to the law, these independent contractors must possess a valid license or permit.
Here are some key scenarios in which corporate tax applies to freelancers:
Individuals possessing the recently introduced freelance permit, accessible under the updated labor law for self-sponsored expatriates, are exempt from corporate tax on their income.
In the case of independent contractors holding business licenses within free zones, if they engage in work for other companies, the sponsoring entity is obligated to pay the corporate tax.
For freelancers employed by a company, their income from salaries remains untaxed at the individual level. Instead, it is the responsibility of the company issuing the visa to pay income tax on its net profit.