Tax and accounting for freelancers and sole professionals.

Common tax challenges

Freelancers and sole professionals are treated differently from companies, and most of the confusion comes from applying company rules to an individual or the reverse.

• The AED 1 million threshold. A natural person carrying on business in the UAE comes into Corporate Tax scope once turnover from that activity exceeds AED 1 million in a calendar year. Below that, an individual is generally outside the regime, though it depends on the nature of the activity.
• Turnover, not profit. The threshold is measured on revenue. A freelancer billing AED 1.2 million with high costs is still in scope even if the profit is modest.
• What counts as business income. Salary, personal investment income and personal real estate income are generally outside the regime. Income under a freelance permit is not.
• VAT arrives earlier. The VAT registration threshold is AED 375,000 of taxable supplies, which many freelancers cross well before the Corporate Tax threshold.
• Overseas clients. Services to customers outside the UAE may be zero-rated, but only where the conditions are met. Zero-rated supplies still count towards the registration threshold.
• Mixed accounts. Running business income through a personal account makes both registration thresholds and deductible costs almost impossible to evidence.

What we provide

• Assessment of whether either threshold has been crossed
• Registration where required
• Simple bookkeeping proportionate to a one-person business
• Invoicing set up to meet tax invoice requirements
• VAT returns where registered
• Corporate Tax computation and filing where in scope

Typical documents

• Freelance permit or trade licence
• Client invoices for the period
• Bank statements, ideally a dedicated business account
• Expense receipts for business costs
• Contracts with overseas clients, where zero-rating is claimed

Questions we are asked

I earn under AED 1 million. Do I need to do anything? For Corporate Tax, generally not, but the VAT threshold is far lower and applies separately. The two are independent.

All my clients are abroad. Does that exempt me? Not automatically. Zero-rating has conditions, and zero-rated supplies still count towards VAT registration.

Getting started

Tell us your licence type and what is outstanding, and we will confirm which returns apply and what the deadlines are before any work begins. Send us your details, or check your position with the tax status tool.