The UAE Ministry of Finance has released a new ministerial decision regarding Small Business Relief, which enables small businesses with revenues of $816,880 (Dhs3m) or less to receive tax relief during a tax period when their revenue does not surpass a certain threshold. The objective of Small Business Relief is to help startups and other small or micro businesses by decreasing their corporate tax burden and compliance expenses, according to Article 21 of the corporate tax law. The ministry has specified that taxable persons who are UAE residents may receive Small Business Relief if their revenue in the relevant and previous tax periods is below Dhs3m for each period. The revenue threshold will apply to tax periods beginning on or after June 1, 2023, and will remain in effect until the end of December 31, 2026, for all subsequent tax periods.
Small businesses’ revenue will be calculated according to applicable accounting standards recognized in the country. The UAE’s new corporate tax, which will be imposed for the first time in June 2023, will not apply to qualifying free zone entities or multinational companies as defined in Cabinet Decision No. 44 of 2020. The Ministry of Economy stated that the number of small and medium-sized enterprises (SMEs) operating in the country had reached 557,000 by the end of 2022, with the aim of increasing this number to one million by the end of 2030. SMEs contribute 63.5% of non-oil GDP, according to Abdullah bin Touq Al Marri, UAE Minister of Economy.