UAE Sole Proprietors Face March 2026 Deadline: Corporate Tax Registration Mandatory for AED 1M+ Turnover Businesses

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March 31 Corporate Tax deadline looms for UAE natural persons earning over AED 1 million in 2025.

Natural persons with business revenue exceeding AED 1 million in 2025 must register for Corporate Tax by 31 March 2026 or face an AED 10,000 penalty.
The AED 1 million threshold applies to gross revenue, not profit—meaning registration is mandatory even if taxable income falls within the zero-rate band.
Freelancers, sole proprietors, consultants, and social media influencers all fall within scope if their business turnover exceeds the threshold.
Employment income, personal investment returns, and residential rental income do not count toward the AED 1 million threshold.
A one-time penalty waiver is available for late registrants who file their tax return within seven months of their first tax period end date.
Small Business Relief may allow eligible natural persons with revenue up to AED 3 million to treat taxable income as zero for periods ending before 31 December 2026.

The Federal Tax Authority (FTA) has issued urgent reminders that natural persons—including freelancers, sole proprietors, consultants, and social media influencers—who earned business revenue exceeding AED 1 million during calendar year 2025 must register for Corporate Tax by 31 March 2026. Non-compliance triggers an immediate administrative penalty of AED 10,000 under Cabinet Decision No. 10 of 2024.

This deadline represents a critical compliance milestone under Federal Decree-Law No. 47 of 2022, which introduced Corporate Tax effective 1 June 2023. While the 9% tax rate has been widely discussed for companies, the March deadline specifically targets individual business operators who have crossed the turnover threshold.

Who Must Register: Defining "Natural Persons"

According to the FTA's official Corporate Tax Guide CTGRNP1, a natural person is any living individual conducting business or business activity in the UAE. The definition encompasses a broad range of self-employed professionals and unincorporated business operators.

Those within scope include:

Freelancers and consultants operating under freelance permits or commercial licences
Social media influencers earning from brand partnerships, sponsored content, and affiliate marketing
Sole proprietors running unincorporated businesses
Individual partners in unincorporated partnerships
Self-employed professionals such as doctors, lawyers, architects, and trainers

The FTA clarifies that any individual holding a commercial licence or permit to carry out commercial, industrial, or professional activities in the UAE is considered to be conducting business for Corporate Tax purposes.

Understanding the AED 1 Million Threshold

The registration trigger is annual turnover—meaning gross revenue—exceeding AED 1 million within a calendar year (1 January to 31 December). This distinction is critical: the threshold applies to total business income before any deductions, not net profit.

Income That Counts Toward the Threshold

Only revenue from business or business activity is included in the calculation:

Consulting fees and professional service charges
Freelance project income and business service contracts
Brand partnerships and sponsorships
Product sales through a licensed business
In-kind compensation valued at market rate, including free products, hotel stays, and travel received for promotional services

Income Excluded from the Calculation

Several income categories do not count toward the AED 1 million threshold:

Employment income, including salaries, bonuses, and allowances
Personal investment income such as dividends, bank interest, and capital gains from personally-held securities
Rental income from personally-owned residential property not held under a real estate business licence

This exclusion is significant. An individual earning AED 800,000 from consultancy, AED 300,000 in salary, and AED 150,000 in dividends has only AED 800,000 in taxable business turnover—below the threshold and therefore not required to register.

Corporate Tax Rates and Calculation

Once registered, natural persons are subject to Corporate Tax on their taxable income—calculated as revenue minus allowable business expenses—under a two-tier structure:

Taxable income up to AED 375,000: 0% tax rate
Taxable income above AED 375,000: 9% on the excess amount only

A critical clarification: the AED 375,000 figure is a tax band, not an exemption from registration. Natural persons must still register, file returns, and comply with all obligations even if their taxable income falls within the zero-rate band. The registration obligation is triggered by revenue, while the tax liability is determined by taxable income.

Practical Example

Consider a management consultant with total revenue of AED 1.2 million and business expenses of AED 880,000. Their taxable income of AED 320,000 falls below the AED 375,000 threshold, resulting in zero tax liability. However, because their revenue exceeded AED 1 million, they must still register by 31 March 2026 and file annual returns.

Registration Process via EmaraTax

All Corporate Tax registrations must be completed through the EmaraTax portal at eservices.tax.gov.ae. The platform operates around the clock and provides step-by-step guidance through the registration process.

Required documentation includes:

Emirates ID or passport with UAE residency visa
Trade licence or freelance permit
Business address proof
Bank account details
Contact information for FTA correspondence

Processing typically takes five to ten business days, after which a Tax Registration Number (TRN) is issued and accessible via the EmaraTax dashboard. Alternative registration channels include Tas'heel Service Centres and registered tax agents who can complete the process on behalf of natural persons.

Penalty Waiver Opportunity

The FTA introduced a one-time penalty waiver initiative effective from 14 April 2025. The AED 10,000 late registration penalty will be waived or refunded if the natural person files their Corporate Tax return within seven months from the end of their first tax period.

For those with 2025 turnover exceeding AED 1 million, this means:

Standard registration deadline: 31 March 2026
First tax period: 1 January 2025 to 31 December 2025
Penalty waiver deadline: 31 July 2026 (seven months from tax period end)

Those who register late but file their return by 31 July 2026 will have the penalty waived. Those who already paid the penalty and subsequently file within the seven-month window will receive a refund to their tax account. This is a transitional measure, and similar leniency should not be expected in future years.

Small Business Relief Option

Natural persons with annual revenue up to AED 3 million may qualify for Small Business Relief for tax periods ending on or before 31 December 2026. Electing this relief treats taxable income as zero for the period, eliminating any Corporate Tax liability.

However, the election involves trade-offs. During the relief period, losses cannot be carried forward, and net interest expense carryforward is forfeited. For those expecting significant profit growth beyond 2026, preserving loss relief for future offset may prove more valuable than eliminating current-year tax—particularly if current taxable income already falls within the zero-rate band.

Common Misconceptions

Several misunderstandings persist regarding Corporate Tax obligations for natural persons.

The term "Corporate Tax" misleads many freelancers into believing the regime applies only to companies. In reality, the law explicitly covers natural persons conducting business activities once they cross the AED 1 million turnover threshold.

Some assume that earning below AED 375,000 in profit exempts them from registration. This is incorrect—registration is triggered by revenue, not profit. Similarly, operating without a trade licence does not provide exemption; it compounds the compliance violation.

UAE resident natural persons conducting business from the UAE face potential Corporate Tax on worldwide business income, regardless of client location. The determining factor is where the business is conducted, not where clients are based.

Compliance Obligations After Registration

Registered natural persons must file an annual Corporate Tax return within nine months of their financial year end—by 30 September 2026 for those using the calendar year. Late filing attracts penalties of AED 500 per month for the first twelve months, increasing to AED 1,000 per month thereafter.

All business records must be retained for seven years, including financial records, invoices, bank statements, contracts, and supporting documentation for all transactions. Failure to maintain proper records carries penalties of AED 10,000, rising to AED 20,000 for repeated failures within 24 months.

Banks are increasingly requesting Corporate Tax registration evidence as part of enhanced compliance procedures. Failure to register can result in account restrictions, while major corporate clients now routinely require valid TRN details during vendor onboarding.

Strategic Considerations

The March 2026 deadline signals the definitive end of informal business operations in the UAE. Natural persons earning above AED 1 million should calculate their 2025 turnover immediately and begin the registration process well before the deadline to allow time for resolving any documentation issues.

Professional support from qualified accountants and tax consultants is advisable given the regime's complexity. The cost of professional assistance is substantially lower than penalties, interest charges, and potential audit complications. Those near the threshold should evaluate whether business incorporation might offer advantages including limited liability and clearer exit options.

The registration deadline is not negotiable, the penalty is real, and enforcement is active. Early compliance provides both peace of mind and enhanced business credibility in an increasingly formalised commercial environment.