Exclusions for Natural Persons

Income of individuals that is excluded from Corporate Tax.

Exclusions from Corporate Tax for Natural Persons

1. Income Exempt from Corporate Tax:
   • Income from wages, personal investments, and real estate investments is excluded from Corporate Tax for natural persons as these are not deemed Business or Business Activities under the Corporate Tax Law.
   • Such income is also not considered when determining if turnover exceeds AED 1 million annually from Business or Business Activities in the UAE.
2. Wages and Employment Compensation:
   • Wages, salaries, and other compensation or benefits (cash or in-kind) received by employees from their employers are not subject to Corporate Tax.
   • Determining if a person is an employee earning such remuneration is case-specific.
3. Director Fees:
   • Fees or payments received by directors (e.g., board members of a Public Joint Stock Company) are generally excluded from Corporate Tax.
   • These payments are not classified as income from Business or Business Activities, whether received as part of employment or as an independent director.

Personal Investment Income and Corporate Tax Exemption

1. Exemption Criteria:
   • Personal investment income is not subject to Corporate Tax if it is:
     • Derived by a natural person from investment activities conducted for personal purposes.
     • Neither conducted through a licensed activity nor requiring a license from a Licensing Authority.
     • Not considered a commercial business under the Commercial Transactions Law.
2. Licensing and Economic Activities:
   • Conducting business in the UAE typically requires a license, with different types available based on activity, such as industrial, commercial, professional, or freelance licenses.
   • Investment activities requiring or conducted through such licenses are not exempt from Corporate Tax.
3. Definition of Commercial Business:
   • A commercial business, as per the Commercial Transactions Law, includes activities conducted by a trader or speculative activities intended to generate profit.
   • Activities considered commercial by nature, occupation, or association with a trade may also fall under this category.
4. Key Distinction:
   • If an activity is not classified as a commercial business but involves personal investments conducted independently and without a license requirement, it qualifies as Personal Investment Activity and is exempt from Corporate Tax.

Real Estate Investment Income and Corporate Tax Exemption

1. Exemption Criteria:
   • Real estate investment income is not subject to Corporate Tax if:
     • It is derived by a natural person.
     • It involves activities such as selling, leasing, sub-leasing, or renting land or real estate property in the UAE.
     • These activities are conducted without a license or do not require a license from a Licensing Authority.
2. Key Distinction:
   • If real estate activities require or are conducted through a license, the income may not qualify for the exemption.