The UAE has announced an extension to its small business relief programme pertaining to corporate tax valid until 31 December, 2029. This initiative is designed to offer fiscal support for small enterprises, start-ups, and entrepreneurs across the Emirates.
The Ministerial Decision No. 131 modifies current corporate tax regulations, allowing eligible businesses to continue benefiting from tax relief for periods ending on or before the specified date according to the Ministry of Finance.
Simplification of Corporate Tax Compliance
The new provisions enable businesses generating annual revenue of up to Dh 3M ($816,882) to enjoy simplified corporate tax compliance requirements, contingent upon meeting the stipulated legislative criteria.
The ministry emphasised that this decision is part of a broader strategy to enhance the business environment within the UAE, fostering the growth of small companies while reinforcing the nation’s stature as a premier global investment hub.
Incentives for SMEs
This move underscores the UAE’s commitment to creating a competitive tax framework that supports sustainable economic advancement and aligns with global best practices.
As the country continues to emphasise the significance of small and medium enterprises (SMEs), it offers various incentives aimed at promoting their development.
Government statistics indicate that SMEs constitute over 94% of the UAE’s business landscape, contributing more than 60 per cent to the nation’s non-oil gross domestic product.
Higher Thresholds for SMEs
The UAE implemented a federal corporate tax with a standard rate of 9%, effective from the financial year commencing on or after 1 June 2023.
Companies generating income exceeding Dh375,000 now fall within the taxable framework while those with profits below this threshold incur a 0% tax rate.
The Ministry clarified that corporate tax will apply to business owners only if their turnover surpasses Dh1M in a calendar year, ensuring taxation is based on income derived from business activities.
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