UAE Corporate Tax and Small Business Relief (SBR)
UAE Corporate Tax and Small Business Relief (SBR)
The UAE introduced a federal Corporate Tax (CT) regime effective from 1 June 2023 to align with international tax standards and enhance transparency. Corporate Tax is levied on the taxable income of UAE resident businesses, while certain small businesses with limited revenue may benefit from exemptions.
To support smaller enterprises and ease the transition into the new tax framework, the UAE offers Small Business Relief (SBR). SBR is designed to reduce compliance obligations, allowing small businesses to focus on growth and operations without the immediate burden of complex tax calculations. It primarily targets businesses with annual revenue of AED 3 million or less, enabling them to operate under simplified tax reporting rules.
To qualify for SBR, a business must:
Be a Resident Person: Includes both natural and juridical persons (companies).
Revenue Threshold: Maintain annual revenue of AED 3,000,000 or less in the current and all previous tax periods.
Not Be a Member of a Multinational Enterprise (MNE). Not Be a Qualifying Free Zone Person.
Benefits of SBR
Tax Exemption: Eligible businesses are treated as having no taxable income for the relevant tax period, meaning no corporate tax is due.
Simplified Compliance: Businesses can prepare financial statements using the cash basis of accounting and file simplified tax returns.
No Transfer Pricing Documentation: While the arm’s length principle still applies, businesses are not required to maintain detailed transfer pricing documentation.
Limitations and Considerations
Interest Expense Deductions: Opting for SBR means businesses cannot deduct net interest expenses during the tax period, nor carry forward such expenses to future periods.
Loss Carry forwards: Businesses that elect for SBR cannot carry forward tax losses to offset future taxable income.
Ineligibility for Other Reliefs: Certain tax reliefs and deductions are unavailable to businesses under SBR.
Our Services Include:
Corporate Tax Consultancy
VAT Registration and Filing
CFO Services
Our experts collaborate with clients and deliver actionable insights and dependable support. Whether you are a new business or a well-established company, Accutx Accounting and Bookkeeping ensures that your tax obligations are fulfilled with confidence and precision.