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For an individual carrying on a business or business activity in the UAE, the AED 1 million threshold is based on turnover (gross business income before expenses), not total annual income. Wage, personal investment income and qualifying real estate investment income are not treated as business or business activities for this threshold.
For corporate tax purposes, wage includes remuneration an employee receives for services under an employment contract, whether in cash or in kind, including allowances, bonuses and other benefits provided under the employment contract or applicable UAE legislation.
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What Counts as Wage for UAE Corporate Tax?
A payment does not become subject to corporate tax simply because it is not expressly listed in an employment contract. The key question is whether the individual receives the payment in their capacity as an employee. The FTA states that employee status and the character of the remuneration are determined based on the facts of each case.
If the payment is remuneration for independent consulting, freelance work or another business or business activity, it may instead form part of the individual’s business turnover.
Receiving remuneration from more than one company does not, by itself, determine the corporate tax treatment. Each arrangement should be assessed based on the individual’s actual role and the capacity in which the payment is received.
Director fees also require separate consideration. The FTA’s Natural Persons Guide states that director fees will generally not be considered a business or business activity and therefore would generally fall outside corporate tax. The facts of the arrangement should still be reviewed.
Personal Investment Activity
Personal investment income is outside UAE corporate tax where the investment is conducted by a natural person for their own account, is neither conducted through nor requires a UAE licence, and is not classified as a commercial business under the Commercial Transactions Law.
The Commercial Transactions Law includes certain profit-seeking speculation within the commercial-business framework and separately lists virtual asset activities as commercial activities. The facts of the individual’s activity must therefore be assessed before assuming that investment income is outside Corporate Tax.
Share and securities trading does not automatically fall within UAE Corporate Tax. The FTA gives an example of an individual investing personal savings in listed securities without requiring a Licence; the resulting income is treated as Personal Investment income and is outside Corporate Tax.
However, where an individual’s activity is instead classified as a business or business Activity, the AED 1 million test applies to turnover (gross business income before expenses). If the threshold is exceeded, corporate tax is then calculated by reference to taxable income (business profit after applicable tax adjustments), not simply gross turnover.
Virtual Asset Activities
The Commercial Transactions Law lists virtual asset activities as commercial activities. However, this does not mean every personal holding or disposal of a virtual asset is automatically subject to Corporate Tax. For a natural person, the analysis should consider whether the activity is conducted for the person’s own account, whether it is conducted through or requires a UAE licence, and whether it is classified as a commercial business under the Commercial Transactions Law.
Looking for a Corporate Tax Consultant in the UAE?
Beaufort Associates can help you assess whether income is treated as wage, personal investment income or income from a business or business activity for UAE Corporate tax purposes. Contact Beaufort Associates to discuss your position.
Frequently Asked Questions
Are Payments Outside an Employment Contract Automatically Subject to UAE Corporate Tax?
No. A payment does not automatically become taxable merely because it is not specifically stated in an employment contract. The nature of the payment and the capacity in which the individual receives it must be considered.
Are Salaries and Wages Subject to UAE Corporate Tax?
Generally, no. Wages received by an individual as an employee are not treated as income from a business or business activity for UAE Corporate Tax purposes.
Can Bonuses and Allowances Be Treated as Wages?
They may be treated as wages where they are received by the individual in their capacity as an employee. The treatment depends on the facts and circumstances and is not determined only by whether the amount appears in the written employment contract.
Are Director Fees Subject to UAE Corporate Tax?
Director fees received by an individual will generally not be treated as income from a business or business activity. However, the individual’s circumstances and the nature of the activities should still be considered.
Mohammed Shabeeb
Last Reviewed on 29th September, 2026
This page sets out our understanding of corporate tax based on the legislation and guidance in force at the date of last review. The position may change, and the application to a particular set of facts may require further analysis. Nothing on this page constitutes professional, legal or tax advice. Beaufort Associates accepts no liability for action taken or not taken in reliance on this page. Please contact us for advice tailored to your circumstances.
Sources
Primary sources referenced on this page:
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, as amended.
- Cabinet Decision No. 49 of 2023 on Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person that are Subject to Corporate Tax.
- Federal Tax Authority Corporate Tax Guide | Taxation of natural persons under the Corporate Tax Law | CTGTNP1 (November 2023).
- Federal Decree-Law No. 50 of 2022 Promulgating the Commercial Transactions Law.
We have referenced the legislation in force as at the last review date. The UAE tax framework is evolving; later changes may affect the position. Speak with us for advice on your specific circumstances.
