UAE’s Ministry of Finance Aims to Reduce Startups, SMEs’ Corporate Tax Burden11. April 2023
The United Arab Emirates’ Ministry of Finance (MoF) announced that 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.
The AED3 million revenue threshold will apply to tax periods starting on or after 1st June 2023 and will only continue to apply to subsequent tax periods that end before or on 31st December 2026.
MoF said that revenue can be determined based on the applicable accounting standards accepted in the UAE.
Small Business Relief will not be available to Qualifying Free Zone Persons or members of Multinational Enterprises Groups (MNE Groups).
MNE Groups are groups of companies with operations in more than one country that have consolidated group revenues of more than AED3.15 billion.
The MoF said in a statement,
“Small Business Relief is intended to support startups and other small or micro businesses by reducing their Corporate Tax burden and compliance costs. The Ministerial Decision on Small Business Relief specifies the revenue threshold and conditions for a taxable person to elect for Small Business Relief and clarifies the provisions of the carried forward Tax Losses and disallowed Net Interest Expenditure under the Small Business Relief scheme.”
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