Key takeaways
- An individual is within corporate tax only when business turnover exceeds AED 1 million in a calendar year.
- Wages, personal investment income and real-estate investment income that needs no licence never count, whatever the amount.
- Once you are in, tax is on profit, not turnover: 0% on the first AED 375,000 and 9% above, with Small Business Relief available for tax periods ending on or before 31 December 2029.
- For 2026 turnover, register by 31 March 2027, then file and pay by 30 September 2027.
Corporate tax for freelancers in the UAE turns on one figure. An individual who earns more than AED 1 million a year from business carried on in their own name, as a consultant, freelancer or owner of a sole establishment, is within the regime and must register. Registering late costs AED 10,000. The test is narrower than it is often described, however. Salary, personal investments and property income that needs no licence sit outside it entirely, which matters for senior professionals and family business owners whose income comes from several sources at once.
How the AED 1 million test works
Under Cabinet Decision No. 49 of 2023, an individual comes into corporate tax only through business activity, and only when the total turnover of that activity exceeds AED 1,000,000 in a calendar year. Three features of the test decide most cases.
It is measured on turnover, not profit. A consultant billing AED 1.1 million with AED 700,000 of costs is over the line, even though the profit is modest.
It runs on the calendar year. For individuals the tax period is always 1 January to 31 December, whatever the business's own reporting cycle.
It applies to individuals only. Companies have no AED 1 million threshold. A company is within corporate tax whatever its turnover, with 0% on its first AED 375,000 of taxable income. Owners who hold some activities personally and others through a company should test each separately.
What never counts towards the threshold
These are outside corporate tax for individuals, whatever the amount:
| Income | Counts towards AED 1 million? |
|---|---|
| Fees from freelance or consulting work | Yes |
| Sales from a business you run in your own name | Yes |
| Salary and other wages from employment | No: wage |
| Returns on personal investments, with no licence and not as a commercial business | No: personal investment income |
| Rent or sale proceeds from property that needs no licence | No: real-estate investment income |
Consider a salaried engineer who earns AED 700,000 in salary and AED 400,000 from consulting on the side, and who also lets an apartment she owns personally that needs no licence. Only the AED 400,000 of consulting fees counts. That is under AED 1 million, so she does not need to register for that year. Her total income is well above the threshold, which is exactly why the categories matter.
Over the threshold: profit is taxed, not turnover
The AED 1 million is a threshold, not an allowance. Once turnover crosses it, the business profit for the year becomes the starting point and the normal rates apply: 0% on the first AED 375,000 of taxable income and 9% on the rest. Individuals are also outside the interest-limitation rule that applies to companies.
The deadlines follow the calendar year:
| Step | 2026 turnover over AED 1 million |
|---|---|
| Tax period | 1 January to 31 December 2026 |
| Register for corporate tax | By 31 March 2027 |
| File the return and pay the tax | By 30 September 2027 |
| Keep records | For 7 years after the end of the tax period |
Non-resident individuals have three months from the date they meet the conditions to register. The deadline finder confirms the dates for your own position.
Small Business Relief for individuals
Small Business Relief (SBR) allows a taxable person to be treated as having no taxable income for a tax period. It is open to individuals as well as companies, provided revenue is AED 3 million or less in that period and in every previous period. The election is made period by period, in the return.
Ministerial Decision No. 131 of 2026 has extended SBR to tax periods ending on or before 31 December 2029. The previous end date was 31 December 2026. The relief carries conditions that are easy to overlook.
An SBR return is simplified, but you still register, file it by the same 30 September deadline and keep records. Tax losses and net interest from a year in which you elect SBR cannot be carried forward. And exceeding AED 3 million in any period removes eligibility permanently, so a single strong year closes the door for good.
Worked example: AED 1.4 million of turnover
A freelance consultant has 2026 turnover of AED 1,400,000 and AED 600,000 of deductible business expenses, giving a profit of AED 800,000. Her turnover is over AED 1 million, so she must register by 31 March 2027.
| Without SBR | With SBR | |
|---|---|---|
| Business profit | AED 800,000 | AED 800,000 |
| Taxable income | AED 800,000 | Treated as nil |
| 0% on the first AED 375,000 | AED 0 | Not applicable |
| 9% on the remaining AED 425,000 | AED 38,250 | Not applicable |
| Corporate tax | AED 38,250 | AED 0 |
Without SBR, the tax is 9% of the AED 425,000 above the band, AED 38,250, an effective rate of about 4.8% of profit.
Her revenue of AED 1.4 million is under AED 3 million. If every previous period was also at or below AED 3 million, she can elect SBR and pay nothing for 2026. She still files a simplified return by 30 September 2027 and keeps her records.
Electing is not always the right answer. Suppose a later year brings turnover of AED 1.2 million and costs of AED 1.35 million, a loss of AED 150,000. Electing SBR that year would forfeit the loss. Not electing preserves it, and the loss then carries forward to later years in which she does not elect SBR, where it can offset up to 75% of taxable income.
The corporate tax calculator runs the same comparison on your own figures, and our Small Business Relief service sets out how we decide the election year by year.
The penalties that apply
The late-registration penalty is AED 10,000. It is waived if your first return is filed within 7 months of the end of your first tax period. For a first period of calendar 2026, that date is 31 July 2027, a Saturday, so the safe course is to file by Friday 30 July 2027.
A late return costs AED 500 per month or part month for the first 12 months, then AED 1,000 a month. Late payment attracts 14% a year, applied monthly to the unpaid tax. Failing to keep the required records costs AED 10,000. The penalty estimator shows what a late return would cost in practice.
Common mistakes
- Counting salary towards the AED 1 million. Wages never count.
- Assuming SBR means no return. It means a simplified return, by the normal deadline.
- Applying the AED 1 million test to a company. It is for individuals only.
- Running business receipts through a personal account. A separate business account makes the turnover test, the return and the record-keeping far easier to evidence.
How ebs can help
ebs Chartered Accountants is an FTA Registered Tax Agency (TAN 30022834). Through our freelancers and sole establishments service, we confirm what counts towards your turnover, handle your registration on EmaraTax, and prepare a return that elects Small Business Relief when it saves tax and not when it would cost you a loss. The first consultation is free: contact us.
This article is general information as at 18 August 2026, not advice on your specific circumstances. Tax rules change; check the current position before acting.