Understanding UAE Corporate Tax: What’s Taxed Beyond Employment Agreements?

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Individuals’ income falling under UAE Corporate Tax depends on their employment contract, as per the latest update from the Federal Tax Authority. 

Individuals who are involved in business or related activities and make over Dh1 million annually, need to follow the laws. 

The new tax guide explains that wages are what people get for their work under the job contract, whether it’s money or other perks like allowances and bonuses.

The guide emphasizes the importance of job contracts. If individuals receive any payment outside of their job contract, it might not be considered part of their entitled wage. Figuring out the salary in these cases depends on each situation.

Business owners considering taking salaries from multiple companies still need clarification on the feasibility of working under multiple employment contracts. According to the latest FTA tax guide, director fees won’t be treated as a business or business activity, meaning they won’t be subject to corporate tax.

Personal investment income doesn’t include activities that might be seen as a business under the Commercial Transactions Law. This includes:

  • Speculative activities are done by an individual to make a profit, whether or not they are a trader.
  • Activities related to virtual assets.

If trading in shares and securities is seen as speculative, people might need to follow corporate tax rules, even if they don’t make a profit. For instance, using a Dh10,000 fund 100 times in a year could push you over the Dh1 million annual revenue tax threshold.

Dealing with virtual currencies, non-fungible tokens, and carbon credits requires careful evaluation of tax implications. Check if services related to virtual assets, like exchange houses, are also included.

Income earned from doing business in the UAE now has a new tax. Even short-term activities for the business might be taxed. Where the business happens is what matters, not where the person lives. Whether the income is from UAE or overseas customers, it could be taxed.

Source by: Gulfnews

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