Small Businesses in the UAE are changing the game of initiatives and corporate landscape. Local enterprises are contributing to the growth of the economy with quality goods and services. Considering the potential, the UAE government has introduced UAE Corporate Tax (CT). The ultimate purpose of this regime is to offer several reliefs to small businesses in the UAE. This relief allows small businesses to exempt from the CT strict liabilities, thereby facilitating financial relief. Corporate Tax relief allows eligible Resident Taxable Persons, whether corporate entities or individuals, for Corporate Tax exemption in the UAE if their revenue aligns with the specific eligibility criteria.

Small Business Relief (SBR)

In the UAE, SBR is offered to small businesses for Corporate Tax purposes. It aims at easing the implementation of Corporate Tax regulations. Taxable Persons or businesses that are elected for SBR are benefited from tax as well as administrative relief.

The Eligibility Criteria For The SBR Includes:

• A Person must be a Resident Person for CT purposes
• Should have a revenue of less than or equal to AED 3,000,000 in the previous and current Tax Period
• Should not be a member of MNEs or a qualifying free zone resident

The businesses must

Resident Person

If a natural person conducts a business activity in the UAE, will be considered a resident person as per the declaration of FTA. However, the PEs in the UAE of non-resident persons will not be eligible for SBR, but a non-resident person in a country that has a DTT with the UAE and of regulations ensure dealing with non-discrimination of permanent establishment, then it’s UAE PE would be eligible for SBR. Also, a foreign legal entity managed and controlled in the UAE will also be considered a resident person.

Revenue Threshold

To opt for SBR, a person must have revenue equal to or less than AED 3,000,000 in the relevant Tax Period and any previous tax periods.

To calculate the revenue to opt for SBR, a business can apply for the IFRS or the Cash Basis of Accounting, but it can still be subjected to objection if the outcome is not justified. Moreover, revenue must include income, whether taxable or not, while calculating.

Tax Compliance

Corporate tax registration, record-keeping, and annual tax returns are still required for SBR. However, there are certain tax compliance requirements, such as transfer pricing documentation, where SBR offers relief to businesses.

In a nutshell, the commitment of the UAE to support and promote small and medium-sized businesses highlights the dedication to the growth of the entrepreneurial landscape. For businesses, it is equally important to leverage the opportunities to contribute to economic growth and achieve their own milestones. Natural persons who are engaged in business activity in the UAE can opt for the Small Business Relief UAE program to simplify the accounting process. However, there are some limitations and eligibility restrictions, but that also highlights the soundness and effectiveness of the program.

How SBR Benefits Businesses?

It is crucial to follow the instructions to comply with the SBR requirements. A taxable person must meet the SBR conditions and get elected in the tax returns for each tax period. The following are the benefits a taxable person can get from SBR:

Administrative Relief

Administrative benefits will help simplify the tax returns and record-keeping process. It will make a taxable person able to prepare financial statements using the cash basis of accounting. Moreover, transfer pricing documentation rules are not applied to the businesses in the tax period for which they elect SBR.

Tax Relief

SBR offers eligible taxable persons to have no taxable income for the relevant tax period till 2026. The taxable person will not have to calculate the taxable income or identify the relevant expenses to apply for or deduct any other reliefs. Moreover, he is not required to pay corporate tax on income earned in that particular tax period.

Other Considerations

Once a taxable person is elected for SBR, he will not be eligible for other reliefs in that tax period. For instance, he will not be able to utilize or transfer tax loss.

SBR Application Process

Applying for the SBR process is a simple process but requires careful attention when it comes to submitting crucial business details.

Here is how you can apply for SBR:

CT Registration: The first step is to ensure that your business is registered for corporate tax. Corporate tax registration is a prerequisite to applying for SBR.

Submit Tax Return: Small businesses that qualify for SBR need to file a simplified tax return to reduce administrative tasks and comply with regulatory obligations.

Annual Assessment: Every year businesses must conduct an assessment to verify if they are eligible to apply for the SBR program. It is important to get relief every year; any changes in the revenue will affect the eligibility.

How Professional Advice Can Help Your Business?

Tax compliance and planning in the strict regime calls for consulting services providers that help you meet the requirements seamlessly without any legal actions. A tax advisor is necessary when applying for relief. From preparing financial statements to record-keeping and registering for the program, an advisor helps you fulfill each requirement without hassle. At Accountax, we offer professional advice to access your business revenue to help you operate while meeting all necessary rules and obligations. Using the right approach and complying with the necessary rules, the SBR program can serve as a powerful tool for small businesses to grow in the UAE business environment.

Conclusion

SBR is a golden opportunity for small businesses and enterprises in the UAE to get relief from several administrative and tax regulations. Access your company’s eligibility criteria and apply for SBR. Accountax helps you identify your company’s status for the Small Business Relief UAE Corporate Tax application and guides you throughout to help your business grow. We help you comply with the regulatory framework and conditions of SBR to benefit your business.