Family, salary and benefits
Salary or dividends: which is better for me as a solo owner?
Usually safe if you keep the documents
The basic rule
Dividends and other profit paid out to an owner do not count as a cost. Pay for an owner’s work counts up to market value. The UAE has no personal income tax on salary or dividends for individuals, but another country may tax you if you live there for tax purposes.
When it is different
- A company whose taxable income stays below AED 375,000 pays 0% on that portion, so the difference may be small.
- Under Small Business Relief there is no Corporate Tax for the period either way.
- A sole establishment or freelancer cannot pay itself a salary or dividends: money taken out is a withdrawal.
- If you are tax resident in another country, its rules may change the answer completely.
Documents to keep
- Shareholder decisions for each dividend
- Financial statements showing distributable profit
- Salary documents as described in the owner salary entry
How safe is it?
Usually safe if you keep the documents Low for the rules themselves; the choice depends on your personal situation.
When to ask a professional
This is a planning question: ask an FTA-registered tax agent, and a tax professional in any other country where you may be resident. Who can confirm it for your own case: an FTA-registered tax agent (a tax professional approved by the UAE tax authority), or the optional year-end review in SoloBooks.
Check it with the free calculator: Small Business Relief calculator →
Sources
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (consolidated, unofficial English translation) — Art. 33(4) and 33(5), Art. 36
- Cabinet Decision No. 116 of 2022 on the amount of Taxable Income subject to 0% (AED 375,000) — Art. 2 and 3
- Cabinet Decision No. 49 of 2023 on natural persons subject to Corporate Tax — Art. 2 (wages and personal investment income outside Corporate Tax)
General information, not tax advice. Your situation may differ.
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Related questions
- Can my company pay my children's school fees as an expense?
- Can I pay my spouse or a relative a salary from the company?
- I own my FZ-LLC alone. Can the company pay me a salary, and is it deductible?
- I am a freelancer or sole establishment. Is money I take out for myself a cost?
- Is health insurance for me and my family deductible?
- Am I eligible for Small Business Relief (no Corporate Tax for small businesses)?