Small Business Tax in the UAE: How Resident Individuals Can Benefit from Tax Exemptions
The small business tax in the United Arab Emirates aims to reduce the tax burden on small and medium-sized companies, where resident individuals can benefit from it if their revenues in the relevant tax period and previous tax periods are less than AED 3 million for each tax period. It is important to note that once the taxpayer exceeds the maximum allowable revenue threshold of AED 3 million, they will no longer be able to benefit from the tax exemption.
The implementation of the decision to reduce small business tax
The application of the revenue threshold of AED 3 million will start in tax periods beginning on or after June 1, 2023 and will continue for tax periods ending on or before December 31, 2026. Revenues can be determined based on the relevant accounting standards accepted in the United Arab Emirates.
Those who are not eligible to apply the decision
The exemption from the Small Business Tax will not be available to individuals who belong to qualified free zone companies or members of Multinational Enterprise (MNE) Groups as specified in Ministry Resolution No. 44 of 2020 regarding the regulation of reports submitted by MNE Groups. MNE Groups are groups of companies operating in more than one country and have a combined group revenue exceeding AED 3.15 billion.
Important Information about Small Business Tax in the UAE
There are some additional points to consider regarding the UAE’s Small Business Tax.
- Firstly, individuals who wish to benefit from the Small Business Tax reduction must formally apply for the reduction to the Federal Tax Authority before the deadline for filing the relevant tax return period.
- Secondly, individuals who wish to apply for this reduction must provide all required information and documents, including financial reports and previous tax reports.
- Thirdly, individuals who wish to benefit from the Small Business Tax reduction must deposit the due tax by the specified deadline, according to the instructions issued by the Federal Tax Authority.
- Fourthly, it should be noted that the Small Business Tax reduction only applies to the national Value-Added Tax (VAT) and not to corporate tax. This should be considered when planning financing and managing the company’s financial resources
As Small Business Tax is an important government tax in the UAE, it is advisable to collaborate with a professional tax consultant from AHG to ensure compliance with all tax regulations and instructions related to this tax and to identify the necessary tax procedures to achieve balance.
AHG Accounting, Auditing & Taxation Services is a leading company that provides accounting, financial, and taxation services in the United Arab Emirates. The company offers a comprehensive range of specialized tax services to assist clients in complying with local and international tax legislation and regulations.
AHG provides multiple services, including tax return preparation and validation, tax advisory and planning for clients, as well as financial audit and accounting services to ensure compliance with local and international accounting regulations and standards.
AHG Accounting, Auditing & Taxation Services relies on a highly qualified team of accountants, auditors, and financial advisors with extensive experience in the field of taxation. The company utilizes the latest technologies and tools to enhance efficiency and accuracy in its service delivery.
Working with AHG Accounting, Auditing & Taxation Services is characterized by full attention to detail, a focus on achieving the highest levels of quality in the services provided, and providing innovative and effective solutions to meet clients’ needs in a professional and reliable manner. The company is a trusted partner for many leading companies across various sectors in the United Arab Emirates.
