UAE Corporate Tax: Small Business Relief – A Comprehensive Overview
The UAE’s Corporate Tax regime introduces Small Business Relief to support small businesses and startups operating in the region. This relief is designed to simplify the tax compliance burden for eligible small businesses, providing a valuable incentive for entrepreneurship and growth. Below, we explore the key aspects of Small Business Relief, including eligibility criteria, conditions, and the benefits it offers.
Who Can Elect for Small Business Relief?
The following entities are eligible to elect for Small Business Relief:
- Resident Persons: This includes both natural persons (individuals) and juridical persons (legal entities) who are residents of the UAE for Corporate Tax purposes.
Conditions for Small Business Relief
To be eligible for the Small Business Relief, the following conditions must be met:
- Election for Each Tax Period: Businesses must elect to apply for the relief for each tax period independently.
- Revenue Threshold: The entity's revenue must be equal to or less than AED 3,000,000 in both the current and all previous tax periods. If revenue exceeds this threshold in any previous tax period, the business will not be eligible for the relief in the current tax period.
What is the Small Business Relief?
The Small Business Relief provides the following benefits:
- Taxable Income Treatment: Businesses electing for the relief are treated as if they have not derived any taxable income for the tax period. This essentially means they will not be subject to corporate tax for that period.
- Limited Availability of Other Exemptions: Businesses electing for Small Business Relief cannot avail themselves of other exemptions, reliefs, or deductions. This trade-off simplifies tax compliance but limits other tax benefits.
- Transfer Pricing Compliance: Although transfer pricing documentation is not required for entities under Small Business Relief, they must still comply with the arm’s length principle. This means transactions with related parties must be conducted as if they were between independent entities.
Who Cannot Elect for Small Business Relief?
Certain businesses are explicitly excluded from electing for the relief, including:
- Qualifying Free Zone Persons: Businesses operating in designated Free Zones that meet specific qualifying criteria for corporate tax purposes are excluded from electing Small Business Relief.
- Members of Large Multinational Groups: Any business that is part of a multinational group with consolidated group revenue exceeding AED 3.15 billion cannot elect for the relief.
Join the MB&A CPAs Community:
Stay connected with MB&A CPAs on social media through linkedin, facebook, instagram, twitter, tiktok, and youtube for the latest updates on industry trends, financial insights, and upcoming events.
Together, we can build a brighter future with accurate and insightful information.
Related Contents
© Copyright. All rights reserved.
We need your consent to load the translations
We use a third-party service to translate the website content that may collect data about your activity. Please review the details in the privacy policy and accept the service to view the translations.