Small Business Relief, how to benefit from it?

Radia Hammoulhadj
Tax Business Partner

The Ministerial Decision No. 73 of 2023 has been issued by The Ministry of Finance (‘MoF’) on Small Business Relief in accordance with Article 21 of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (‘Corporate Tax Law’). This relief will apply only to UAE Resident juridical persons or individuals below the specified threshold.

Who is concerned

You are an SME with revenues of $816,880 (Dhs 3M) or less. You can claim relief in a tax period because your revenue does not exceed the threshold. Such measures aim to support startups and other small or micro businesses by reducing their corporate tax burden and compliance costs.

Conditions for small Business Relief:

The highlights of the Small Business Relief provision are:

  • Resident Taxable persons should have revenue less than AED 3 million in the relevant and previous tax periods. The relief will not be available if the threshold exceeds AED 3 million in any tax period. Accounting standards accepted in the UAE will determine the revenue.
  • The revenue threshold will apply to tax periods starting on or after 01 June 2023. It will only continue to apply to subsequent tax periods that end before or on 31st December 2026.
  • The Relief will not be available to the following businesses
    • Qualifying Free Zone Persons
    • Members of Multinational Enterprises Groups (MNE Groups) defined in Cabinet Decision No. 44 of 2020 (Country by Country Reporting Regulation)
  • Taxable persons will be able to carry forward and set off business losses in financial years where the business does not elect to apply for the Small Business Relief
  • The FTA considers that persons with total revenue of more than AED 3 million artificially separating their business to claim benefit under the Small Business Relief, are an arrangement to obtain a Corporate Tax.

To learn more, you can contact us.