As companies in the UAE scramble to meet their corporate tax registration deadlines, freelancers, social media influencers, and solo entrepreneurs can exhale. These individual-operated structures have until March 2025 to finalize the corporate tax registration if they meet underlying provisions.
Girish Chand, Senior Partner at MCA Gulf stated that freelancers and influencers who do not hold the legal entity license are only obliged to register their business if their income has reached Dh1 million in the calendar year.
“If their income for 2024 is more than Dh1 million, they are required to complete the FTA registration by March 31, 2025,” he added. Since the due date is in March 2025, freelancers have ample time at their disposal to register themselves for the program.
The first one Is for those of you who make Dh 1m-plus per year; the second one is for those who make Dh 250,000 to Dh 999,999; and the third category is for those who make Dh 50,000 to Dh 249,999. According to information gathered from Sumayya Zain, Managing Partner at Hallmark International Auditing of Accounts, the tax requirements on freelancers are quite lenient.
She shared valuable information with her audience by pointing out that those working as freelancers and have an annual turnover of between Dh1 million – Dh3 million may be eligible for the Small Business Relief in the UAE provided they maintain accounts properly. This program would consider them as having no taxable income for a given tax period.
The registration requirements can differ depending on what type of license the freelancer holds. If the license is under a ‘natural person’ the threshold for non-compliance is set at Dh 1 million. However, for those who are registered as a ‘juridical person,’ no such limit exists and the individual must register no matter their income.
A Booming Freelancer Economy
The market for freelancers has increased in the UAE in the last three years with professionals in technology, project management, and now AI projects. Some of them earn huge fortunes through promotional endorsements; they too are part of this growing freelance economy.
The general taxation policy of the UAE is somewhat liberal for freelancers, as is the case with corporate organizations. For instance, if a freelancer makes Dh1. If some consultants earn Dh5 million within a year from consultancy services offered to a foreign company, then they should register for corporate tax, and Dh1.1 million is considered as net profit after the expense. 1 million. But they can make use of the 0% tax on the next Dh375,000 of taxable income.
Fiscal Effects on Foreign Freelance Workers
Any freelancer who is staying outside the UAE but gets a contract within the UAE and earns Dh1 million or more will be considered a resident for corporate tax. Nevertheless, if they are established in a country with which the UAE has entered into an agreement on the avoidance of double taxation, such an agreement will define their residence and their taxation treatment.
When, Why and How Should Freelancers ‘Cash Basis of Accounting’
It is for this reason that freelancers may opt to use what is known as the ‘cash basis of accounting,’ whereby professionals report income and expenditure only when actual cash has been received or paid in a specific financial year. This approach disposes of the fact that they wouldn’t have to pay tax on invoices raised but not yet paid. Around, ‘accrual accounting’ entails paying taxes on income once an invoice is sent out, even if payment has not been made.
