On 06 April 2023, Ministry of Finance (‘MoF’) of UAE has issued decision on small business relief vide de Ministerial Decision No. 73 of 2023 for the purposes of Federal Decree-Law No. 47 of 2022 (‘DL No. 47/2022’) on the Taxation of Corporations and Businesses.

 

Article 21 of DL No. 47/2022 provided small business relief to persons falling withing specified threshold. Ministerial Decisions provides the eligibility criteria, eligible tax period, exclusion and consequences of non electing. Salient features provided of Ministerial Decision No 73/ 2023 are as under:

 

  • Eligibility: Taxable persons that are resident persons in UAE and where their revenue in the relevant tax period and previous tax periods is below AED 3 million for each relevant tax period.

 

  • Eligible Tax Period:  Tax periods (financial year) starting on or after 1 June 2023 to ending on before 31 December 2026.

 

  • Exception: Small Business Relief will not be available to Qualifying Free Zone Persons and UAE constituent entities of Multinational Enterprises Groups (MNE Groups) having group revenues of more than AED 3.15 billion.

 

  • Non-Electing: Eligible business non electing to small business relief can carry forward tax losses and disallowed net interest expenditure.

 

  • GAAR: Artificially separation of business or business activity to claim small business relief may leads to imposition of General Anti-Abuse Rules (GAAR) provisions by Federal Tax Authority (‘FTA)

For more details, refer the enclosed newsflash and we shall also be happy to clarify and further aspect on this.

 

For our previous Newsflash on UAE Taxation, please refer to: https://www.rsm.global/india/insights/tax-insights/uae-releases-federal-decree-taxation-corporations-and-businesses

 

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