The UAE Ministry of Finance has issued a new ministerial decision for businesses with revenues of AED3 million or less, wherein they can claim a “Small Business Relief.”
The authority stated that “taxable persons that are resident persons can claim Small Business Relief where their revenue in the relevant tax period and previous tax periods is below AED3 million for each tax period,” as per a Twitter post by UAEBARQ.
However, once the revenue threshold is exceeded, the Small Business Relief will no longer be available.
Supporting startups and SMEs in the UAE
The AED3 million revenue threshold will apply to tax periods starting on or after June 1, 2023. However, it will only apply to subsequent tax periods that end before or on December 31, 2026.
The revenue can be determined based on the applicable accounting standards accepted in the Emirates, the statement said.
This decision was issued in accordance with Article 21 of the Corporate Tax Law, which stipulates that if the revenue of a taxable person does not exceed a certain threshold, they will not be considered as having derived any taxable income in a given tax period, according to an emailed statement by the Ministry of Finance.
In addition, the Small Business Relief will not be available to Qualifying Free Zone Persons or members of Multinational Enterprises Groups (MNE Groups) as defined in Cabinet Decision No. 44 of 2020 on Organising Reports Submitted by Multinational Companies. MNE Groups are groups of companies with operations in more than one country that have consolidated group revenues of more than AED3.15 billion, the statement said.
Businesses will also be able to carry forward any incurred tax losses and any disallowed net interest expenditure from such tax periods for use in future tax periods where the Small Business Relief is not elected, only if businesses do not elect to apply for relief.
The statement added that the Ministerial Decision also clarifies that if the Federal Tax Authority (FTA) establishes that taxable persons have artificially separated their business or business activity and the total revenue of the entire business or business activity exceeds AED3 million in any tax period and such persons have elected to apply for Small Business Relief, this would be considered an arrangement to obtain a Corporate Tax advantage under Clause (1) of Article 50 regarding the general anti-abuse rules of the Corporate Tax Law.
Follow us on
