Ministerial Decision No. 73 of 2023 on Small Business Relief has been issued by the Ministry of Finance to support small businesses in the UAE in accordance with Article 21 of the Corporate Tax Law.
✔ The decision applies to taxable persons who are resident persons and whose revenue in the relevant tax period and previous tax periods does not exceed Dhs3 million for each tax period. If a taxable person’s revenue surpasses AED3 million in a tax period, they will no longer be eligible for Small Business Relief.
✔The Dhs3 million revenue threshold will apply to tax periods starting on or after 1 June 2023 and will only continue to apply to subsequent tax periods that end before or on 31 December 2026.
✔Revenue can be determined based on the applicable accounting standards accepted in the UAE.
✔Small Business Relief will not be available to Qualifying Free Zone Persons or members of Multinational Enterprises Groups (MNE Groups) as defined in Cabinet Decision No. 44 of 2020. MNE Groups are groups of companies with operations in more than one country that have consolidated group revenues of more than Dhs3.15 billion.
✔In tax periods defined in the decision where businesses do not elect to apply for Small Business Relief, they will be able to carry forward any incurred Tax Losses and any disallowed Net Interest Expenditure from such tax periods, for use in future tax periods in which the Small Business Relief is not elected.
✔The Ministerial Decision also addresses the artificial separation of business, where taxable persons have separated their business activity to obtain a Corporate Tax advantage, this would be considered an arrangement under the general anti-abuse rules of the Corporate Tax Law.
To conclude, the Small Business Relief initiative aims to encourage and support small businesses in the UAE, helping them to grow and contribute to the economy.
Click below to Download the Ministerial Decision No. 73 of 2023