SMALL BUSINESS RELIEF IN CORPORATE TAX

Corporate Tax will be effective from 01 June 2023 in the United Arab Emirates. As a part of the corporate tax laws issued in the United Arab Emirates, the govt. has also introduced certain relief for businesses from Corporate Tax. Let us understand the criteria for the relief from Corporate Tax offered to Small Businesses in UAE.

Firstly, the UAE has introduced a tax rate of 0% for all businesses in UAE for Taxable Income up to an expected threshold of AED 375,000.00, which has to be confirmed by the cabinet decision.

Additionally, small businesses with revenue less than a certain threshold (awaiting the threshold confirmation through cabinet decision) will be able to claim “small business relief” and can be treated as not having taxable income during a reporting tax period. Such businesses might be subject to simplified compliances. The small business relief may be approved by the Authority against the application for such relief. These small businesses should satisfy the below conditions:

• The reporting tax period’s and the previous tax periods’ revenue does not exceed the threshold set by the Minister.
• All other conditions specified by the Minister should be satisfied by the taxable person

If a business elect for small business relief, the following provisions will not be applicable to them:

1. Benefits of the Exempt Income.
2. Benefits of transferring within a Qualifying Group.
3. Relief from Business Restructuring
4. Deductible expenses and their provisions
5. Tax loss reliefs.
6. Transfer Pricing documentation

A business must carefully analyze all the details of the financial reports and prepare for Corporate Tax compliance as specified by the Federal Tax Authority. Our team at Flying Colour will be happy to assist you with Corporate Tax and other Taxes, Accounting, and Compliance requirements.