Freelancers and sole traders in the UAE often assume they are outside corporate tax because they are individuals, or inside it because they hold a trade licence. Both assumptions are wrong in different ways. The law uses one number: AED 1 million of business turnover in a calendar year. With 2026 almost three-quarters done, this is the right month to check which side of that line you are on, because the registration deadline for this year’s turnover is 31 March 2027.
- Individuals conducting business are in scope only if turnover exceeds AED 1,000,000 in a Gregorian calendar year (Cabinet Decision No. 49 of 2023).
- The test is on turnover, not profit, and covers all your business activity together.
- Salary, personal investment income and qualifying personal real estate income are outside the threshold.
- Registration is due by 31 March after the year you cross the line.
Are you in scope? A quick test
| Your situation | Corporate tax? | Action |
|---|---|---|
| Employee on a salary | No, wages are excluded | None |
| Freelancer or sole trader, turnover AED 900,000 | No, under the threshold | Keep records, monitor monthly |
| Freelancer or sole trader, turnover above AED 1,000,000 | Yes, business is in scope | Register and file |
| Owner of a company (LLC or free zone company) | The company is in scope regardless of size | Company registers and files |
Rental income from your own property and investment income are generally outside the AED 1 million test, but conditions apply, so confirm with the Federal Tax Authority guide on natural persons.
What you could actually owe: three scenarios
| Scenario | Taxable profit | Tax at standard rates | With Small Business Relief |
|---|---|---|---|
| Turnover AED 900,000 | AED 500,000 | Not in scope, AED 0 | Not needed |
| Turnover AED 1,200,000 | AED 600,000 | 9% on 225,000 = AED 20,250 | AED 0 if you elect and qualify |
| Turnover AED 3,500,000 | AED 1,500,000 | 9% on 1,125,000 = AED 101,250 | Not available above AED 3M |
The first AED 375,000 of taxable income is taxed at 0%, and the balance at 9%. The middle row is the one most freelancers land on: you must register once you pass AED 1 million, but if revenue stays within AED 3 million you can usually elect Small Business Relief and pay nothing. You still register and file. Read the eligibility traps in our guide to Small Business Relief, including how the cumulative revenue test works.
Deadlines and penalties
- Register by 31 March of the year after your turnover crossed AED 1 million. For 2026 turnover, that is 31 March 2027.
- File the return within nine months of the end of the tax period.
- Late registration carries a reported AED 10,000 penalty. Some guides mention a waiver for earlier cases, so check current FTA relief before assuming it applies to you.
You can register as a natural person using your Emirates ID, a description of the activity and turnover evidence. See the wider filing picture in our corporate tax deadline guide.
Practical steps this quarter
- Add up 2026 invoiced turnover across all clients, platforms and licences. They aggregate.
- Project the year end. If you will pass AED 1 million, plan registration and tax cash now.
- Keep deductible costs documented. Our deductions and add-backs guide shows what counts.
- Separate personal and business spending. Owner withdrawals are not deductible.
- Check VAT too, the registration threshold is AED 375,000, see VAT registration.
If you are on a freelance permit or remote work visa
A free zone freelance permit holder is a natural person for this test. Compare the structures in our freelance visa guide. Remote workers should note the remote work visa is for foreign clients only, see the Dubai remote work visa guide, and tax residency is a separate matter, see the tax residency certificate guide.
FAQ
Do I pay tax on the AED 1 million or only above it? The AED 1 million is a scope test. Confirm how it applies to your numbers with an adviser, because the computation rules matter once you are in scope.
Is my salary part of the threshold? No. Wages are excluded.
Read the primary rules on the Federal Tax Authority website. Close to AED 1 million? Ask BizDaddy to review your position before year end.
