UAE extends corporate tax relief for small businesses until 2029

The UAE has extended its small business relief programme for corporate tax purposes until December 31, 2029, in a move to support small businesses , start-ups and entrepreneurs. The Ministry of Finance said on Friday that Ministerial Decision No. 131 amends existing corporate tax rules to allow eligible businesses to continue claiming the relief for tax periods ending on or before December 31, 2029. The extension enables businesses with annual revenue of up to Dh3 million ($816,882) to continue benefitting from simplified corporate tax compliance requirements, provided they meet the conditions set out in the relevant legislation, the ministry said in a statement. The ministry said its decision was aimed at strengthening the business environment in the UAE, supporting the growth of small businesses and start-ups, and reinforcing the country’s position as a leading global investment destination. “It also reaffirms the UAE’s commitment to developing a competitive tax system that supports sustainable economic development, promotes compliance and remains aligned with international best practices," it added. The latest move comes the UAE continues to focus on boosting the role of SMEs in the economy, offering them benefits and incentives. SMEs make up more than 94 per cent of the UAE’s businesses and contribute more than 60 per cent to the country’s non-oil gross domestic product, government data shows. The UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent starting from the financial year beginning on or after June 1, 2023. It brought the income of companies exceeding Dh375,000 within the taxable bracket. Taxable profits below that level are subject to a levy of zero per cent. The ministry also confirmed later that business owners in the country would be subject to corporate tax only if their turnover in a calendar year exceeds Dh1 million, ensuring that only business or business-related activity income is taxed.