Recently, the UAE Government issued a new policy implementing tax relief for small businesses earning below AED 3 million. The Ministry of Finance’s decision applies totax periods starting on or after June 1, 2023 and will only continue to apply to subsequent tax periods that end before or on December 31, 2026.
Qualifying free zone persons or members of multinational enterprise groups are not qualified to apply for the new tax relief program. According to the UAE Ministry of Finance’s statement, the decision based on Article 21 of the Corporate Tax Law has been enacted to reduce the tax burden and compliance costs of start-ups and small or micro businesses in the country.
This important decision has earned praise, as it is viewed to be another milestone in the country’s all-encompassing economic development and diversification efforts. Here are 3 ways how the latest tax relief will impact small businesses across the UAE.
- Improved Financial Standing: With tax relief, small businesses can focus more on their core business activities and implement more noteworthy projects or programs that are crucial to their expansion.
- Enhanced Competitiveness: The policy will enable small enterprises, considered the backbone of the UAE’s economy, to innovate, expand their product lines, and improve their services, as well as invest in new technologies. This will allow them to be more competitive in the market.
- Increased Investments: The UAE’s tax relief for small companies reflects the government’s commitment to offering an attractive investor-friendly environment and strengthening the country’s status as a global hub for businesses.
The UAE’s new tax relief policy is, without a doubt, a welcome development for entrepreneurs and start-ups, as it means increased opportunities for them to continue to grow and develop. As a tax expert with an in-depth knowledge of the taxation system in the country and the region, we will continue to provide this important sector with comprehensive solutions to assist them in their tax obligations—which, in effect, will help them compete well in the local and regional markets.
