UAE Corporate Tax relief for small businesses

Issued on 3rd April 2023, Ministerial Decision No. 73 of 2023 on Small Business Relief for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the CT Law), applies an important relief for small businesses.

A small business with an annual revenue threshold of less than 3 million AED will not have to pay Corporate Tax (this follows on from Article 21 of the CT Law which delegated authority to the Minister set the threshold). It does not apply to Qualifying Free Zone persons or members of multinational groups (that have consolidated group revenues of more than AED3.15 billion). It applies up until 31 December 2026.

This expands on the relief in the CT Law which applies to businesses recording an annual profit of less than AED 375,000. Where this relief is applied, there will be no ability to carry forward losses. Artificial separation of businesses that fall below the threshold will be subject to review by the Federal Tax Authority and may be set aside under Article 50 of the CT Law.

There may also be a relaxation of filing and registration requirements for small businesses under rules that are still awaited.

For a summary of the key points within the new UAE Corporate Tax law, please refer to our guide published in February 2023.