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Proposed application of corporate tax on the tax residents and non-residents

June 20, 2022

The resident individuals would be subject to tax on their UAE-sourced business income only which requires a commercial licence.

The word ‘resident’ is a key determinant in the application of corporate income tax and personal income tax laws across the globe. Like if the person is a resident of a country, usually its worldwide income is subject to income tax in that country, and if the person is a nonresident in any territory, then their worldwide income is not subject to income tax in that jurisdiction.

Like global practices, the UAE has adopted the same approach. As given in the corporate tax public consultation documents, if the person is a resident — resident as defined in the consultation document of the UAE, then its worldwide income would be subject to corporate tax (CT) in the UAE unless a resident individual whose income from the UAE businesses only would be subject to CT in the UAE.