UAE offers corporate tax relief for small businesses
Small businesses with revenue of $816,880 (AED3 million) or less will be able to claim tax relief.
The UAE Ministry of Finance has decided to waive corporate tax for small businesses with revenue of $816,880 (AED3 Million) or less. The decision is to reduce the corporate burden on micro and small businesses.
As per Gulf Business, the decision is in accordance with Article 21 of the corporate tax law, which describes a taxable person as not having any taxable income during a given tax period where the revenue does exceed a certain threshold.
The tax waiver decree will apply to tax periods starting on or after June 1, 2023. This will continue to apply to the subsequent tax periods until December 31, 2026.
However, the new corporate tax will not apply to those operating in free zones or multinational companies operating in the UAE.
The Ministry also noted that "in tax periods 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 for use in future tax periods in which the scheme is not elected."
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Edited by Megha Reddy
