The United Arab Emirates (UAE) has recently announced a new corporate tax relief scheme aimed at supporting startups and small businesses. The UAE Corporate Tax Small Business Relief reduces the tax burden and compliance costs for small or micro businesses with revenues below AED 3 million for each relevant tax period.
This relief applies to tax periods starting from June 1, 2023, until December 31, 2026, but does not apply to qualifying free zone persons or members of multinational enterprise groups. It is important to note that any tax losses or net interest expenditure incurred during a tax period where the small business relief is elected cannot be carried forward.
Furthermore, an anti-abuse rule is in place to prevent businesses from separating their activities to qualify for the relief if their combined revenue exceeds AED 3 million in any tax period.
To Support startups & other small or micro businesses by reducing their corporate tax burden and compliance costs.
Small business’s revenue in the relevant tax period & previous tax period is below AED 3M for each tax period (Revenue based on the applicable accounting standard accepted in UAE)
The relief applies to tax periods starting on or after 1st June 2023 and will end before or on 31st December 2026.
Not Applies to:
- Qualifying free zone persons
- Members of multinational enterprise groups
Where an election to apply small business relief is made in a tax period (i) Any tax losses incorrect (ii) any net interest expenditure incorrect in such period cannot be forwarded to any subsequent periods.
Anti Abuse Rule: If any taxable persons have separated their business or business activity & the revenue of the entire business or business activity exceeds AED 3mn in any tax periods & such persons have elected to apply for small business relief.
Source: Ministry of Finance UAE