The UAE extended its Small Business Relief program for corporate tax purposes until December 31, 2029. Reportedly, eligible small businesses and start-ups can continue to benefit from the relief.
The Ministry of Finance announced the extension through Ministerial Decision No. 131, which amends the existing corporate tax rules. The decision allows eligible businesses to continue claiming the relief for tax periods ending on or before December 31, 2029.
The UAE retained the AED 3 million annual revenue threshold under the extended scheme. Eligible businesses can continue to elect for Small Business Relief.
As per the Act, “An eligible business is treated as having no taxable income for the relevant tax period when it elects for the relief. However, businesses must still meet the applicable filing and compliance requirements.”
The revenue test applies to both the current and previous tax periods. This means a business that crosses the AED 3 million threshold in a relevant period can lose eligibility for the relief.
The original framework allowed eligible businesses to claim the relief for tax periods ending on or before December 31, 2026. However, with the most recent ruling, the period will be extended by three years.
According to the Ministry of Finance, the extension is meant to improve the business climate in the UAE, support small businesses and startups, and ensure sustainable economic development. Small and medium-sized businesses comprise an essential part of the UAE economy.
Experts suggest that the extension is helpful to entrepreneurs' planning process and will also reduce immediate corporate tax compliance costs. Looking ahead, the ruling also helps eligible businesses to strengthen their position as the country continues to develop its corporate tax system.
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