The UAE government has introduced new measures aimed at supporting small businesses in the country. One of the key initiatives is introducing Corporate Tax Relief for small businesses, micro-businesses, and startups, which is expected to positively impact the economy and the business community.

Under the Ministerial Decision No. 73 of 2023, “to elect for Small Business Relief, a person must be a Resident Person and have an annual revenue of less than or equal to AED 3,000,000 in the relevant Tax Period and any previous Tax Periods.”

“However, there are two key exceptions to this criterion:

1. Where the business is a member of a Multinational Enterprise (MNE)
2. Where the business is a Qualifying Free Zone Person.”

Taxable Persons eligible for Small Business Relief, who meet the specified conditions, are required to register for Corporate Tax. They must consciously select the Small Business Relief option when filling out their Tax Return. This election is necessary for every Tax Period in which a Tax Return is filed, ensuring that the relief is applied for that specific period. Those who choose to avail of Small Business Relief enjoy two key advantages:

• Administrative Relief: Qualifying entities can streamline their tax return filing and record-keeping procedures.
• Tax Relief: Businesses that opt for Small Business Relief are not obligated to pay any Corporate Tax on the income earned during the tax period.

Through Small Business Relief, businesses can claim Relief for a specific Tax Period by submitting a notification to Tax Authorities. The relief is applicable for the ongoing Tax Period and all preceding tax periods concluding on or before December 31, 2026.

Therefore, small businesses have the opportunity to avail themselves of this Relief for multiple consecutive tax periods as long as the business maintains its eligibility criteria which is only available until December 31, 2026. Post-2026, Small Business Relief ceases to apply.