In Abu Dhabi, United Arab Emirates, on April 6, 2023, the Ministry of Finance released Ministerial Decision No. 73 of 2023 regarding Small Business Relief under Federal Decree-Law No. 47 of 2022, known as the "Corporate Tax Law." This decision aligns with Article 21 of the Corporate Tax Law, which stipulates that if a taxable entity's revenue falls below a specified threshold in a particular tax period, it will not be considered to have generated any taxable income.

The goal of Small Business Relief is to offer assistance to startups and small or micro enterprises by alleviating their corporate tax obligations and simplifying compliance procedures. The Ministerial Decision pertaining to Small Business Relief outlines the revenue threshold and criteria for eligible people to opt for this relief. Furthermore, it elucidates the regulations regarding carried forward tax losses and the exclusion of net interest expenditure within the Small Business Relief scheme’s framework.

All the Ministerial and Cabinet Decisions pertaining to the Corporate Tax Law can be accessed on the Ministry of Finance's website at www.mof.gov.ae.

• Small Business Relief can be claimed by resident taxable individuals if their revenue in the current tax period and preceding tax periods remains below AED 3 million for each tax period. It's vital to note that once a taxable entity surpasses the AED 3 million revenue threshold in any given tax period, it will no longer be eligible for Small Business Relief.
• The AED 3 million revenue threshold will be in effect for tax periods commencing on or after June 1, 2023, and will persist for subsequent tax periods concluding on or before December 31, 2026.
• Revenue calculation should adhere to the applicable accounting standards approved within the UAE.
• Small Business Relief is not accessible to Qualifying Free Zone Persons or individuals belonging to Multinational Enterprise Groups (MNE Groups), as categorized by Cabinet Decision No. 44 of 2020, governing the regulation of reports submitted by multinational companies. MNE Groups refer to corporate conglomerates functioning in multiple countries, with consolidated group revenues surpassing AED 3.15 billion.
• During the tax periods specified in this decision, businesses opting not to apply for Small Business Relief retain the ability to carry forward any incurred tax losses and any disallowed net interest expenditures from those tax periods for utilization in subsequent tax periods where Small Business Relief is not elected.
• Concerning the deliberate division of business functions, the Ministerial Decision outlines that if the Federal Tax Authority (FTA) determines that taxable individuals have artificially segmented their business or commercial activities and the total revenue generated by the entire business or activity surpasses AED 3 million within a given tax period and these people have chosen to avail themselves of Small Business Relief, such an arrangement will be deemed an effort to gain a corporate tax advantage as per Clause (1) of Article 50, which pertains to the general anti-abuse rules within the Corporate Tax Law.

All the Ministerial and Cabinet Decisions pertaining to the Corporate Tax Law can be accessed on the Ministry of Finance's website at www.mof.gov.ae.