How to Claim Small Business Relief For Corporate Tax UAE?

I’m a Registered Tax Agent in UAE with years of experience who handled VAT, Excise and other Tax practices in UAE. With UAE about to implement Corporate Tax from June 2023, MoF has issued Decision No. 73 of 2023 on Small Business Relief for the Corporate Tax Law about its eligibility and claim of it.

Initially, According to Corporate Tax Law released in 2022, the government notified about small business relief for corporate tax of how a Taxable Person that is a Resident Person may elect to be treated as not having derived any Taxable Income for a Tax Period. The law has the following details mentioned about being eligible to claim Small Business Relief,

• The Revenue of the Taxable Person for the relevant Tax Period and previous Tax Periods should not exceed a threshold set by the Ministry of Finance.
• The Taxable Person meets all other conditions prescribed by the Minister. 

Here are the key takeaways from the new announcement from MoF on Small Business Relief for UAE Corporate Tax. The individual who comes under these points will be considered and eligible to claim the Small Business Relief.

For more Details, Read UAE Announces Relief for Small Businesses from Corporate Tax

The Ministerial Decision on Small Business Relief stipulates the following:

1. 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. This means that once a taxable person exceeds the AED3 million revenue threshold in any tax period, then the Small Business Relief will no longer be available.

2. The AED3 million revenue threshold will apply to tax periods starting on or after 1 June 2023 and will only continue to apply to subsequent tax periods that end before or on 31 December 2026. 

3. Revenue can be determined based on the applicable accounting standards accepted in the UAE.

4. 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.

5. In tax periods defined in the decision where businesses do not elect to apply for Small Business Relief, they will 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 in which the Small Business Relief is not elected. 

6. With regard to the artificial separation of business, the Ministerial Decision specifies that where 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.

We, BMS Auditing Recommend you get ready for the UAE Corporate Tax starting from June 1, 2023. We have the FTA Registered Tax agents who offer the best corporate tax services in UAE and assist you in implementing corporate tax to your business.