What is Small Business Relief?
If you are a resident person operating a small business, you may be eligible to elect for Small Business Relief. This relief aims to help local businesses thrive by easing compliance requirements.
Conditions for Electing Small Business Relief
To qualify for Small Business Relief, businesses must meet the following criteria:
- Corporate Tax Registration – Only businesses registered with the Federal Tax Authority (FTA) are eligible.
- Revenue Threshold – The business must have revenue of AED 3,000,000 or less in the current and all previous tax periods.
- Election for Each Tax Period – The relief is not granted automatically; businesses must apply for it each tax period they wish to claim.
- Resident Business Status – Only businesses registered and operating within the UAE as resident entities are eligible.
Who Cannot Elect for Small Business Relief?
Not all businesses qualify for Small Business Relief. The following entities are excluded:
- Qualifying Free Zone Persons – Businesses operating under a qualifying free zone status in the UAE cannot claim Small Business Relief.
- Multinational Group Members – Businesses that are part of a multinational enterprise (MNE) group with consolidated global revenues exceeding AED 3.15 billion are not eligible.
- Artificial Business Separation – Entities that deliberately split their business into multiple entities to qualify for Small Business Relief will be disqualified.
Why Opt for Small Business Relief?
Electing for Small Business Relief can offer several advantages, such as:
- Zero Tax Liability: Eligible businesses may benefit from corporate tax payments.
- Simplified Compliance: Businesses can avoid complex tax filing procedures, saving time and effort.
- Encouraging Growth: Small businesses can reinvest savings into expansion and development.
How to Apply for Small Business Relief
To elect for Small Business Relief, businesses must:
- Assess Eligibility: Ensure your business meets the conditions.
- Submit the Election: File the request through the UAE Federal Tax Authority (FTA) portal.
- Maintain Records: Keep financial and tax documents updated for compliance.
Small Business Relief in the UAE provides significant benefits to eligible businesses, enabling them to manage corporate tax efficiently. However, businesses must assess their eligibility carefully and apply accordingly.
Resident businesses qualifying for Small Business Relief but incurring a loss in the current tax period can still submit a complete tax return. This allows them to carry forward tax losses to future tax periods, ensuring better tax planning and financial stability.
For expert guidance on corporate tax in the UAE, including Small Business Relief election, contact Gateway Accounting today!