Legislation Details
- Full Title: Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax
- Law Type: Cabinet Resolution
- Law Number: 49 of 2023
- Issued Date: 08 May 2023
- Effective Date: 01 Jun 2023
- Official Gazette: No. 751
- Sector: Tax
- Status: Active
- Number of Articles: 9
- Chapters/Parts: 0
- Amendments: 0
Summary
This Cabinet Resolution specifies the categories of businesses or business activities conducted by resident or non-resident natural persons that are subject to corporate tax in the United Arab Emirates. The resolution aims to clarify the scope of corporate tax applicability for individuals engaged in commercial activities, while excluding certain types of personal and real estate investments from the tax regime. (Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax, 2023, Art. 1-2) The resolution is significant for businesses and individuals in the UAE, as it provides clear guidelines on when corporate tax obligations arise for natural persons conducting commercial activities. This helps ensure compliance with the recently introduced Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, which established the corporate tax framework in the UAE. (Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax, 2023, Art. 1-2)
What is the scope and purpose of this law?
The purpose of this Cabinet Resolution is to specify the categories of businesses or business activities conducted by resident or non-resident natural persons that are subject to corporate tax in the UAE. The resolution aims to clarify the scope of corporate tax applicability for individuals engaged in commercial activities, while excluding certain types of personal and real estate investments from the tax regime. (Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax, 2023, Art. 1-2)
What are the key definitions under this law?
The Cabinet Resolution provides the following key definitions:
- Revenue: The gross income earned during a particular calendar year.
- Wage: The wage payable to an employee in consideration of their services under an employment contract, whether in cash or in kind, and is payable on an annual, monthly, weekly, daily or hourly basis or based on the productivity, including all allowances, bonuses and any other benefits that accrue to the employee under the employment contract or the applicable legislation in the State.
- Personal Investment: Investment activity a natural person conducts for their personal benefit and which neither is conducted through a License nor requires a License from a Licensing Authority in the State, and is not classified as a commercial business in accordance with Federal Decree-Law No. 50 of 2022.
- Real Estate Investment: Any investment activity conducted by a natural person and is directly or indirectly related to the sale, lease or sub-lease of lands or real estate property in the State and neither is conducted, nor requires to be conducted, through a License from a Licensing Authority.
- Corporate Tax Law: Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses.
(Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax, 2023, Art. 1)
What are the main obligations and requirements?
The main obligations and requirements under this Cabinet Resolution are: 1. Businesses or business activities conducted by a resident or non-resident natural person are subject to corporate tax only if the gross revenue generated from such activities exceeds AED 1,000,000 (one million UAE dirhams) within one calendar year. (Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax, 2023, Art. 2(1)) 2. Activities that generate revenue from wages, personal investments, or real estate investments are not classified as businesses or business activities subject to corporate tax, regardless of the amount of revenue generated. (Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax, 2023, Art. 2(2)) 3. A natural person not conducting a business or business activities subject to corporate tax is not required to register for corporate tax purposes. (Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax, 2023, Art. 2(3))
How does this law interact with other UAE legislation?
This Cabinet Resolution is related to and implements provisions of the following UAE federal laws: - Federal Law No. (1) of 1972 on the Competencies of Ministries and Powers of the Ministers, as amended - Federal Decree-Law No. (13) of 2016 on the Establishment of the Federal Tax Authority, as amended - Federal Decree-Law No. (28) of 2022 on Tax Procedures - Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses - Federal Decree-Law No. (50) of 2022 promulgating the Commercial Transactions Law (Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax, 2023, Preamble)
When did this law come into effect?
This Cabinet Resolution was issued on 08 May 2023 and will come into effect on 01 June 2023. (Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax, 2023, Art. 4)
Source Documents
This article analyses Cabinet Resolution Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person and are Subject to Corporate Tax for legal research and educational purposes. For the purpose of interpretation and application, reference must be made to the original Arabic text. In case of conflict, the Arabic text prevails. This does not constitute legal advice.