Corporate tax for freelancers in the UAE: the AED 1 million rule explained

Freelancers and sole proprietors in the UAE come into corporate tax only when their business turnover goes over AED 1 million in a calendar year. Salary, personal investment income and income from property you own personally don't count towards that AED 1 million. If you cross it, you must register by 31 March of the following year, and you can usually elect Small Business Relief while revenue stays at or below AED 3 million.

Key points

• The trigger is business turnover above AED 1 million in a calendar year, not profit.
• Wages, personal investment income and personal real estate income are excluded.
• Register by 31 March of the following year. Late registration costs AED 10,000.
• Your tax period is the calendar year. The return and any payment are due by 30 September of the following year.
• Small Business Relief is available for revenue up to AED 3 million, now extended to tax periods ending on or before 31 December 2029.

Who counts as doing business

Corporate tax applies to a natural person (an individual) who carries on a business or business activity in the UAE. Typical examples:

• Freelancers with a freelance permit
• Consultants, designers, developers and trainers working for clients
• Owners of sole establishments
• People selling goods or services online

Having a licence or not doesn't settle the question by itself. What matters is whether you are carrying on a business activity. For individuals who are employed and also earn money on the side, only the side income is relevant.

What counts towards AED 1 million

The test uses turnover: the gross amount you earn from your business activities in the calendar year, before expenses. If you have several activities or licences, add them together.

Type of income	Counts towards AED 1 million?	Notes
Freelance or consulting fees	Yes	Gross fees, before expenses
Sales from a sole establishment or online shop	Yes	All business activities are combined
Salary and other employment income	No	Wage income is excluded
Personal investment income	No	For example dividends, interest and gains on shares held in your own name, where the activity does not need a licence
Rent from property you own personally	No	Where you don't need a licence to earn it

If you only have salary, investment income and rent from personally held property, you are outside corporate tax however much you earn.

Registration and filing deadlines

Step	Deadline
Business turnover goes over AED 1 million	During calendar year X
Register for corporate tax	31 March of year X+1
Tax period	Calendar year X (1 January to 31 December)
File return and pay any tax	30 September of year X+1
Keep records	At least 7 years

Example: your freelance fees reach AED 1.3 million during 2026. Your first tax period is the 2026 calendar year. You must register by 31 March 2027 and file your 2026 return by 30 September 2027.

Registering late carries a fixed AED 10,000 penalty. A late return costs AED 500 a month for the first 12 months, then AED 1,000 a month. We prepare and submit registrations through your EmaraTax account on our corporate tax registration service.

How the tax is worked out

Once you are registered, tax is charged on your taxable income, not turnover:

1. Start with your business revenue for the year.
2. Deduct business expenses. Costs incurred wholly and exclusively for the business are deductible. Mixed-use costs, such as a phone or car, are deductible only for the business share.
3. The first AED 375,000 of taxable income is taxed at 0%.
4. Anything above AED 375,000 is taxed at 9%.

Example without relief. A consultant earns AED 1.6 million in fees and has AED 900,000 of business expenses. Taxable income is AED 700,000. Tax is 9% of (700,000 − 375,000) = AED 29,250.

Same example with Small Business Relief. Revenue of AED 1.6 million is under AED 3 million, so the consultant can elect Small Business Relief. They are treated as having no taxable income, and no corporate tax is due. They must still register and file the return.

Small Business Relief for individuals

Small Business Relief (SBR) works the same way for resident individuals as for companies:

• Revenue must be AED 3 million or less in the tax period and in every previous tax period.
• You elect it in your corporate tax return each year. It is not automatic.
• It now applies to tax periods ending on or before 31 December 2029, after Ministerial Decision No. 131 of 2026.
• If you make a loss in a year you elect SBR, that loss can't be carried forward.

For most freelancers between AED 1 million and AED 3 million, SBR means a filing obligation but no tax bill. See our Small Business Relief service.

Records and accounting

Even with SBR, you need books that support your return:

• Use a separate bank account for business income and expenses.
• Keep every invoice and receipt. The Federal Tax Authority (FTA) can ask for them, and records must be kept for at least 7 years.
• Cash basis is allowed if your revenue is AED 3 million or less, which is simpler than full accrual accounting.
• Audited accounts are not needed unless revenue is above AED 50 million.

Our bookkeeping service in Dubai keeps your records ready for the return.

Don't forget VAT

VAT is separate and starts much earlier. You must register for VAT when your taxable supplies pass AED 375,000 in the last 12 months, or are expected to in the next 30 days. Late VAT registration also costs AED 10,000. Many freelancers need VAT registration years before corporate tax becomes relevant. See our VAT registration service.

Common mistakes freelancers make

• Counting profit instead of turnover. The AED 1 million test uses gross business income. A freelancer with AED 1.1 million of fees and high costs still has to register.
• Looking at each licence separately. All business activities are added together.
• Waiting until March to check. If you only add up your income after the year ends, you have three months to register and set up records. Track turnover monthly instead.
• Assuming SBR means no paperwork. You still register, keep books and file a return every year.
• Mixing personal and business money. It makes expenses hard to support if the FTA asks questions.
• Forgetting the deadlines move with the calendar year. For individuals, the tax period is always 1 January to 31 December, so the return is always due by 30 September of the following year.

Next steps

Add up your business turnover for this calendar year so far. If it is heading past AED 1 million, plan your registration now rather than in March. Read the official guidance on the FTA website.

To see what registration, yearly filing and bookkeeping would cost, get an instant estimate. When you are ready to register, start with our corporate tax registration service.