The UAE Corporate Tax Law allows small businesses and startups to have relief from compliance burdens in the form of small business relief. Eligible taxable persons can apply for small business relief in the UAE if their revenue is below or equal to AED 3 million in a relevant Tax Period and all previous Tax Periods that end on or before 31 December 2026.
Such businesses can elect to be treated as having no Taxable Income in that period, and will not be obliged to calculate their Taxable Income or complete a full Corporate Tax Return in the UAE. Corporate tax consultants in Dubai can help you apply for small business relief.
However, business owners will be curious to know whether a corporate tax group in the UAE can apply for small business relief. The UAE Corporate Tax Group Guide (CTGTGR1) addresses this valid question. This blog will provide you with valuable information on whether corporate tax groups are eligible for small business relief:
What is a corporate tax group in the UAE?
Two or more taxable persons can form a corporate tax group in the UAE to be treated as a single taxable person as per the conditions of Article 40 of the Corporate Tax Law. Only resident persons as defined in the UAE corporate tax law can form a tax group. Corporate tax advisers in Dubai can help you navigate the regulations to create a tax group.
Are tax groups eligible for small business relief in the UAE?
The corporate tax law treats a corporate tax group as a single taxable person. A tax group that meets the revenue threshold can apply for small business relief in the UAE.
Can specific members of a tax group apply for small business relief?
Since a UAE corporate tax group is treated as a single Taxable Person, Small Business Relief applies to the Tax Group rather than to the individual members of the Tax Group. The revenue threshold limit applies to the consolidated revenue of the corporate tax group and not to each member individually. Consult with corporate tax firms in the UAE to learn more about the rules.
What happens when an SME eligible for relief joins a Tax Group?
If an entity eligible for small business relief during the relevant Tax Period joins a Tax Group, it will lose its eligibility for the relief on a standalone basis. However, the tax group it is part of can enjoy small business relief by meeting the following conditions:
- The consolidated revenue of the Group is below or equal to AED 3 million in a relevant Tax Period and all previous Tax Periods
- None of the members of the Tax Group is a Constituent Company of a Multinational Enterprises Group that is required to prepare a Country-by-Country Report under the UAE’s Country-by-Country Reporting legislation
Example for considering the consolidated revenue of a Group
Consider the example of three companies, Company A, Company B and Company B forming a tax group. Company A is the parent company in the UAE corporate tax group.
All three companies were formed in the current Tax Period. The Revenue of the members in the current Tax Period, after eliminating Revenues earned from members of the Tax Group, is given below:
- Company A: AED 1 million
- Company B: AED 2 million
- Company C: AED 0.5 million
In this scenario, the revenue of each member of the Tax Group on a standalone basis does not exceed AED 3 million in the relevant Tax Period or previous Tax Periods. However, the tax group is not eligible for small business relief as the total Revenue of the Tax Group exceeds the AED 3 million threshold.
Hire the Best Corporate Tax Advisers in Dubai, UAE
Tax groups that meet the relevant conditions can apply for small business relief in the UAE. However, it will be challenging to determine the eligibility criteria and navigate the procedures. This is where the best corporate tax consultants in Dubai such as Tax Gian can help you.
Tax Gian is one of the top corporate tax advisers in Dubai with two decades of experience. Since 2001, Jitendra Chartered Accountants, an associate of JTC, has been providing end-to-end corporate tax advisory services in Dubai. Call us today to ensure your entity is complying with the UAE corporate tax law.