Small Business Relief will be available to UAE Resident Persons whose profit doesn’t exceed AED 3,000,000 for the applicable tax Period and all former tax Ages. Small Business Relief won’t be available to Qualifying Free Zone Persons. still, there are two crucial exceptions to this criterion
- Where the business is a member of a transnational Enterprise Group( MNE);
- Where an enterprise is a Qualifying Free Zone Person.
Small Business Relief reduces the compliance scores faced by small Businesses in the early stages of the Corporate tax governance, primarily by easing the burden of having to calculate and pay Corporate tax.
Any eligible Taxable Person( being a Resident Taxable Person- either a Natural Person or a Juridical Person) with profit below or equal to AED 3,000,000 in a applicable tax Period and all former tax Ages that end on or before 31 December 2026 can handpick to be treated as having no Taxable Income in that period, and won’t be obliged to calculate its Taxable Income or complete a full tax Return.
- executive relief they won’t be needed to calculate their Taxable Income and will profit from simplified tax return form and record keeping conditions, including the capability to prepare their fiscal Statements using the cash base of account; and
- tax relief they aren’t needed to pay any Corporate tax on income earned in the tax Period.
Eligible Taxable Persons can handpick for Small Business Relief in their tax Return. Once the election has been made, they will be suitable to complete a simplified tax Return and benefit from the relief.
Eligible Taxable Persons can elect for Small Business Relief in their Tax Return. Once the election has been made, they will be able to complete a simplified Tax Return and benefit from the relief.
Overview of the Small Business Relief
| If election for Small Business Relief is made | If no election for Small Business Relief is made | |
| Required to register for Corporate Tax | ✔ | ✔ |
| Required to file a full Tax Return | ✘ | ✔ |
| Can file a simplified Tax Return | ✔ | ✘ |
| Required to calculate Taxable Income | ✘ | ✔ |
| No Corporate Tax to pay | ✔ | Depends on the level of Taxable Income |
Important Point
- Taxable person enrollment is obligatory for the Corporate tax
- The limitations on the deduction of Interest expenditure don’t apply to Businesses in the Tax Ages that they’ve tagged for Small Business Relief.
- Small Business Relief won’t be available to Qualifying Free Zone Persons.
- Small Business Relief is an voluntary relief, and Resident Persons that wish to profit from this advantage must handpick for this relief within their tax Return.
- Transfer pricing attestation rules don’t apply to Businesses in the tax Period for which they handpick for Small Business Relief.
- A Tax Group can handpick for Small Business Relief if its profit is equal to or below AED 3,000,000.
- Return form form is simplified for the business that handpick small business relief
- Record keeping is obligatory
Documents Required to Be Maintained if opt for Small Business Relief:
- documents which need to be kept include but isn’t limited to
- Bank statements;
- Deals checks;
- checks or other records of diurnal earnings, similar as till rolls;
- Order records and delivery notes; and
- Other applicable Business correspondence.
Exempt Income will be subject to Corporate Tax if you opt Small Business Relief:
The rules on Exempt Income don’t apply to Businesses that have tagged for Small Business Relief. This means that all income, indeed if it would not be taxable, must be included when a Resident Person calculates its profit for Small Business Relief Purposes.
To ensure that you’re rightly taking advantage of the Small Business Relief available to you, it is important that you consult A&A Associate, the leading corporate tax consultant in uae . Our team will help you make the most informed decisions.
For further enquiries, please feel free to contact us.