Unleashing the Entrepreneurial Spirit in the UAE: Small Business Tax Relief under the UAE Corporate Tax Law

The United Arab Emirates (UAE) continues to foster a conducive business environment, and the Small Business Tax Relief under the newly introduced UAE Corporate Tax Law is an epitome for that.

The Ministerial Decision No. 73 of 2023 on Small Business Relief to the Federal Tax Law no. 47 of 2022 states that the taxable person that is a resident person may elect to be treated as not having derived any taxable income for a tax period where the revenue threshold of the taxable person for the relevant tax period does not exceed AED 3 million.

The relief applies to businesses and individuals operating in mainland companies and free zone entities (if not electing to be a Qualified Free Zone person).    The Small Business Relief is presently announced for up to 31 December 2026.

Summary to Small Business Relief:

• The Taxable Person’s Revenue should not exceed AED 3 million in the relevant or in the previous tax period.
• The Revenue for the purpose of this Decision shall be determined in accordance with the IFRS following cash basis method of accounting.
• A Resident person that elects to apply for the Small Business Relief must not be a Constituent Company of a Multinational Enterprises Group.
• A Free Zone Person who has elected to be a Qualified Free Zone Person cannot elect for Small Business Relief.
• A Person who has not artificially separated their Business or Business activities and the amount of Revenue across the business or business activities collectively does not exceed the revenue threshold.