The UAE’s Ministry of Finance announced relief for small and micro businesses, startups and freelancers under the corporate tax, which will come into effect from June 1, 2023. and will only continue to apply to subsequent tax periods that end before or on December 31, 2026.
Tax relief initiative as it is intended to support start-ups and other small businesses by reducing their corporate tax burden and compliance costs.
The Ministry said that the turnover has to be below Dh 3 million revenue threshold for both relevant tax periods and previous tax periods.
Under the initiative, taxable persons that are resident persons can claim Small Business Relief where their revenue in the relevant tax period and previous tax periods is below Dh3 million for each tax period.
It further explained that the tax Relief, 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.
If taxable persons have artificially separated their business or activity and the total revenue exceeds Dh3 million in any tax period and such persons have elected to apply for Small Business Relief, this would be considered an arrangement to obtain a Corporate Tax advantage under Clause (1) of Article 50 regarding the general anti-abuse rules of the Corporate Tax Law.
However, the ministry added that the relief will not be available to qualifying free zone persons or members of Multinational Enterprises Groups with operations in more than one country and consolidated group revenues of more than Dh3.15 billion.
. The Ministerial Decision No. 73 of 2023 specifies that businesses and individuals with revenues of Dh3 million or less can benefit from Small Business
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