Small businesses in the UAE have received welcome clarity on Corporate Tax, with Small Business Relief extended until 31 December 2029.
The extension gives eligible businesses and start-ups additional time to benefit from the relief, while the existing AED 3 million annual revenue threshold remains unchanged.
For business owners, this can mean a reduced Corporate Tax compliance burden during the early stages of growth. However, eligibility still needs to be assessed carefully, and businesses must continue to maintain appropriate accounting records and meet their Corporate Tax obligations.
What is Small Business Relief?
Small Business Relief was introduced as part of the UAE Corporate Tax regime to support smaller businesses and start-ups.
Where the relevant conditions are met, an eligible taxable person can elect for Small Business Relief if its revenue does not exceed AED 3 million for the relevant tax period.
The relief has applied to eligible tax periods beginning on or after 1 June 2023. Following the latest extension, it will now continue to apply to qualifying tax periods ending on or before 31 December 2029.
The AED 3 Million Revenue Threshold Remains
The current AED 3 million annual revenue threshold established under Ministerial Decision No. 73 of 2023 remains unchanged.
This means businesses with revenue of AED 3 million or less may continue to consider Small Business Relief for eligible tax periods through 2029, provided all applicable conditions are satisfied.
Importantly, the relief is not automatic simply because a business falls below the revenue threshold. Each business should review its circumstances and confirm that it meets the relevant eligibility requirements before making the election in its Corporate Tax return.
What Does the Extension Mean for UAE Businesses?
For eligible SMEs and start-ups, the extension provides greater certainty when planning for the coming years.
Businesses that remain below the AED 3 million revenue threshold may have additional tax periods in which they can benefit from Small Business Relief. This can help reduce the administrative and tax compliance burden while allowing management to focus on growing the business.
However, businesses should not treat Small Business Relief as a reason to reduce the quality of their financial reporting.
Accurate and up-to-date bookkeeping remains essential. Your accounting records will help establish your annual revenue, support your eligibility for the relief and provide the information required when preparing your Corporate Tax return.
Good Bookkeeping Remains Essential
Even where Small Business Relief applies, businesses must continue to maintain appropriate financial records and comply with their applicable Corporate Tax registration and filing requirements.
This makes reliable bookkeeping particularly important.
Businesses should ensure that revenue is recorded accurately, transactions are properly classified and supporting documentation is maintained throughout the financial year rather than waiting until the Corporate Tax filing deadline approaches.
Proper records also allow businesses to identify early when revenue is approaching the AED 3 million threshold and assess how this could affect their future Corporate Tax position.
Review Your Corporate Tax Position Regularly
The extension of Small Business Relief is positive news for smaller UAE businesses, but Corporate Tax planning should not be based on the revenue threshold alone.
As your business grows, changes in revenue, structure, activities or ownership can affect your tax position. Reviewing your Corporate Tax strategy regularly can help identify potential obligations and opportunities before they become urgent.
At CRESCO Accounting, we work with businesses across the UAE to maintain reliable accounting records, manage Corporate Tax compliance and understand the tax implications of their business decisions.
If you have any questions about Small Business Relief, how the extension may affect your business, or would like to discuss your company’s Corporate Tax position and tax strategy, please reach out to our team. We would be happy to review your circumstances and help you determine the appropriate next steps.
