The Federal Decree-Law No. 47 of 2022 on the Taxation of Companies and Businesses has been amended by Ministerial Decision No. 73 of 2023 on Small Business Relief (the Corporate Tax Law) If the revenue for the relevant tax period and the two prior tax periods was less than Dh3 million for each tax period, then Taxable Persons who are Residents may claim Small Business Relief. This means that the Small Business Relief will no longer be accessible if a taxable person crosses the Dh3 million revenue threshold in any tax month.
The Dh3 million revenue barrier will only continue to be applicable for consecutive tax periods that conclude before or on December 31, 2026, beginning with tax periods beginning on or after June 1, 2023.
Based on the applicable accounting standards recognized in the UAE, revenue can be calculated. Qualified Free Zone Individuals and members of Multinational Enterprise Groups (MNE Groups), as defined in Cabinet Decision No. 44 of 2020 on Organizing Reports Filed by Multinational Businesses, are not eligible for Small Business Assistance. MNE Groups are collections of businesses that conduct business in more than one nation and have combined annual group revenues more than Dh3.15 billion. Businesses will be able to carry forward any incurred Tax losses and any disallowed Net Interest expense from the decision-defined tax periods for use in subsequent tax periods where the Small business relief is not elected. This applies to tax periods where businesses do not elect to apply for Small Business relief.
According to the Ministerial Decision, where the Federal Tax Authority (FTA) determines that taxable persons have artificially separated their business or business activity and the total revenue of the entire business or business activity exceeds Dh3 million in any tax period and such persons have chosen to apply for Small Business relief, this would be considered an arrangement to qualify for Small Business Relief.
The UAE Ministry of Finance makes a determination about small business relief for corporate Tax purposes.
Abu Dhabi: The Federal Decree-Law No. 47 of 2022 on the Taxation of Companies and Businesses has been amended by Ministerial Decision No. 73 of 2023 on Small Business Relief (the Corporate Tax Law)