With the introduction of the UAE Corporate Tax in 2023, many freelancers and independent professionals across Dubai, Abu Dhabi, Sharjah, and other emirates are seeking clarity on their tax obligations. Understanding who is liable and the steps to ensure compliance is essential to avoid penalties and maintain smooth business operations.

This article explains corporate tax liability for freelancers in the UAE and what actions they should take in 2025.

1. Are Freelancers Subject to Corporate Tax in UAE?

Freelancers who operate as sole proprietors or have registered professional licenses are considered businesses under UAE law. If their taxable income exceeds AED 375,000 per annum, they become liable to pay the standard 9% corporate tax on profits.

2. Taxable Income for Freelancers

Taxable income includes all profits earned from freelance activities after deducting allowable business expenses. Freelancers must keep accurate financial records to calculate taxable profits accurately.

3. Registration Requirements

• Freelancers whose taxable income exceeds the mandatory registration threshold must register with the Federal Tax Authority (FTA) for corporate tax.

• Those with income below the threshold may register voluntarily to benefit from deductions or carry forward losses.

4. Filing Corporate Tax Returns

Freelancers are required to file annual corporate tax returns declaring their income, expenses, and tax due. Proper bookkeeping and timely submission are crucial to comply with UAE tax laws.

5. VAT vs Corporate Tax: What Freelancers Should Know

Many freelancers in the UAE are also subject to Value Added Tax (VAT) registration if their annual turnover exceeds AED 375,000. VAT is separate from corporate tax but both must be managed correctly to avoid double penalties.

6. Tax Deductions and Allowances

Freelancers can deduct legitimate business expenses such as office rent, utilities, travel, and equipment from their gross income, reducing their corporate tax liability.

7. Steps Freelancers Should Take Now

• Assess your annual income to determine if corporate tax registration is required.

• Maintain detailed financial records and invoices.

• Consult with tax advisors to optimize your tax position.

• Register with the FTA and file returns on time.

• Stay updated on UAE tax regulations and deadlines.

Final Thoughts

Corporate tax liability for freelancers in the UAE depends largely on income levels and business structure. By understanding their obligations and taking proactive steps, freelancers in Dubai, Abu Dhabi, and Sharjah can remain compliant and focus on growing their businesses in 2025.

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