Corporate Tax Registration Planning: Small Business Relief

The timeline for corporate tax registration in the UAE has been announced by the Federal Tax Authority (FTA). The late registration penalty for corporate tax in the UAE is AED 10,000. However, businesses should not rush to register for the UAE corporate tax as it may lead to grave errors.

Corporate tax advisers in Dubai advise business owners to have a robust strategy for corporate tax planning in the UAE so that they can meet the requirements without any mistakes or compliance failures. Several factors need to be considered before registering for corporate tax in the UAE.

If you are a small business or startup, you must think about the eligibility requirements for small business relief in the UAE before applying for tax registration. In this blog, we will provide you with valuable insights on corporate tax planning with a focus on small business relief:

What is small business relief in the UAE?

Small businesses and startups that are resident in the UAE can apply for small business relief so that they can ease the implementation of the corporate tax regime. The purpose of small business relief in the UAE is to help SMEs and startups reduce their compliance obligations primarily by relieving the burden of having to calculate and pay Corporate Tax.

Determine whether eligible for small business relief

Before making the corporate tax registration in the UAE, you should determine whether your business is eligible to apply for the small business relief. Corporate tax advisers in Dubai can help you determine this. To be eligible for small business relief in the UAE, the following conditions need to be met:

• The taxable person’s revenue must be below or equal to AED 3,000,000 for the relevant Tax Period and all previous Tax Periods
• The business should not be a member of a Multinational Enterprise (MNE) Group
• The business should not be a Qualifying Free Zone Person

Benefits of Electing for Small Business Relief

The eligible Taxable Persons who have elected for the Small Business Relief in the UAE will benefit from the following:

Administrative Relief

The SMEs and startups that have elected for the small business relief are not required to calculate their taxable income. They will also benefit from simplified tax return filing and record-keeping requirements, including the ability to prepare their Financial Statements using the cash basis of accounting.

Tax Relief

The persons elected for the small business relief in the UAE are not required to pay any Corporate Tax in the UAE on income earned in the Tax Period. Corporate tax consultants in the UAE can advise you further on this.

Some Small Business Relief Limitations to Consider

Applying for corporate tax registration in the UAE is mandatory for SMEs planning to avail of the small business relief. However, before making a decision based on the benefits you must also consider the limitations as well:

1. It will be available up to 31^st December 2026 only
2. The taxable persons won’t be able to carry forward losses to the next year
3. The SME relief status will be lost if it crosses AED 3 million turnover

We can advise you on Corporate Tax Planning

While planning for corporate tax registration in the UAE, SMEs must factor in the small business relief. The pros and cons of the small business relief must be properly assessed before electing for the mechanism. Corporate tax advisers in Dubai such as Tax Gian can help you with the process of corporate tax planning.

Tax Gian, a brand of Jitendra Tax Consultants (JTC), is one of the best corporate tax consultants in Dubai. We have a team of highly qualified corporate tax experts in Dubai who can guide you on all aspects of the corporate tax regime. TAX GIAN, under the umbrella of Jitendra Chartered Accountants (JCA), has more than 20 years of experience in serving the requirements of businesses in the UAE.