Ministerial Decision No. 73 of 2023 on Small Business Relief has been issued by the Ministry of Finance (MoF) in accordance with Article 21 of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022). The relief is exclusively accessible to UAE resident individuals or juridical persons who meet the specified threshold criteria.
For the tax period starting on or after 1 June 2023, small businesses with revenue less than AED 3 million (approx. EUR 750,000) in the current and prior tax periods will be regarded as having no taxable income. If they wish to avail themselves of small business relief, they must submit an application to the Federal Tax Authority. The term “tax period” refers to any financial year that begins on or after 1 June 2023 for the company.
The highlights of the Small Business Relief provision are:
- Resident Taxable persons should have revenue less than AED 3 million in the relevant tax period and previous tax periods. If the threshold exceeds AED 3 million in any tax period, the relief will not be available. The revenue will be determined based on accounting standards accepted in the UAE.
- The revenue threshold will apply to tax periods starting on or after 01 June 2023 and 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 objective of the Small Business Relief is to reduce the Corporate Tax burden on start-ups and small or micro businesses in the UAE. Details about the relief in terms of compliance, such as simplified filing, have yet to be clarified.
