Corporate Tax

Taxable Persons

Taxable Persons

[Based on the Public Consultation Document released by the Ministry of Finance, UAE on 28 April 2022.]

The UAE Corporate Tax (‘CT’) has proposed to tax the income of all persons, except natural persons. Income earned by natural persons (individuals) shall not be subject to tax, except in certain circumstances.

The below chart shows various taxable persons under the UAE Corporate Tax regime.




Taxability of Natural Person

It has been made clear that there is no intention to parallelly tax the income of the natural person. Therefore, employment income and other personal income earned by UAE residents and foreign individuals will not be within the scope of the proposed UAE Corporate tax regime.

The treatment of income earned by Natural Persons (Individuals) under the UAE Corporate Tax regime is summarized hereunder:

Salary and other employment income (whether received from the public or private sector)CT Not Applicable
Individual’s Business income earned under a commercial licenseCT Applicable
The investment in real estate by individuals in their personal capacityCT Not Applicable provided the individual is not required to obtain a commercial license or permit to do the activity
Rental receipts from UAE real estate investments are held in a personal capacityCT Not applicable
Other Investment Income (investment held in a personal capacity)CT Not applicable
Dividends, capital gains, and other income earned from owning shares or other securities in their personal capacityCT Not Applicable
Interest and other income earned by an individual from bank deposits or saving schemesCT Not Applicable
Income earned by individuals from activities carried out under a freelance license / permit OR from an activity which requires a license/permit to perform such activity as per local lawsCT Applicable



Taxability of Legal Persons

UAE Corporate Tax will apply to UAE companies and other legal persons incorporated in the UAE, as well as foreign legal entities that have a permanent establishment in the UAE or that earn UAE-sourced income.


The taxability of various Legal persons is summarized in the table hereunder:



Type of legal entityTaxability
Legal Person (Limited Liability Companies, Private Shareholding Companies, Public Joint Stock companies, and other entities that have separate legal entities) incorporated in the UAECT Applicable
Legal Person incorporated in a foreign jurisdiction, but effectively managed and controlled in the UAECT Applicable, as if UAE incorporated
Limited liability partnership/partners limited by shares (where no partner has unlimited liability)Treated as UAE Company - CT Applicable (Entity will be subject to tax and not the partners)
Limited and general partnership / other unincorporated joint ventures and AOPTreated as transparent entities – partners/members taxable
Collective Investment funds that are structured as limited partnershipsTreated as transparent entities – partners/members taxable
Foreign unincorporated partnershipsTo follow the tax treatment of the respective foreign jurisdiction

Our comments:

The Consultation Document has brought in the concept of Place of Effective Management (‘POEM’). This triggers tax implications when the residents of the UAE conduct business by establishing legal entities outside the UAE. In this scenario, there is a possibility that these legal entities (ies) (which are managed and controlled in the UAE) established outside the UAE may be taxable in both jurisdictions and will have to determine the taxability based on the tie-breaker Rule of the Tax Treaty between the two jurisdictions.

It is therefore recommended that businesses established outside the UAE but managed and controlled from the UAE may analyse the tax implications to optimise tax expenses.


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