MD 73/2023 — Small Business Relief

Factual summary

Sets the conditions of Small Business Relief under Article 21 of the Corporate Tax law. A resident person whose revenue is AED 3,000,000 or less in the relevant tax period and in every previous tax period may elect to be treated as having no taxable income. Members of multinational groups and Qualifying Free Zone Persons cannot elect. In an elected period, tax losses and net interest expenditure cannot be carried forward, and splitting a business artificially to stay under the threshold is treated as an arrangement to obtain a Corporate Tax advantage under Article 50(1) of the law.

What it means in practice Professional insight

Who: resident businesses with revenue of AED 3,000,000 or less in the current and all previous tax periods (not Qualifying Free Zone Persons, not members of a multinational group). What to do: decide whether to elect in the Corporate Tax return; it is an election, not an exemption — the return is still filed and losses of an elected period are lost. The election window runs to periods ending on or before 31 December 2029 (MD 131/2026).

Key provisions

• Art. 2(1) Revenue threshold AED 3,000,000 for the relevant and each previous tax period.
• Art. 2(2) Original window: periods ending on or before 31 Dec 2026 — replaced by MD 131/2026 (31 Dec 2029).
• Art. 3 Not available to Qualifying Free Zone Persons or constituent companies of multinational enterprise groups.
• Arts. 4–5 No carry-forward of tax losses or net interest expenditure from an elected period.
• Art. 6 Artificial separation of a business to stay under the threshold is an arrangement under Art. 50(1) of the law.