UAE Corporate Tax | Small Business Relief (2)
Example 7: Calculation of Revenue
ABC LLC is a UAE Resident Person. During its most recent Tax Period, ABC LLC made sales of AED 1,500,000 and received AED 1,000,000 of dividends from UAE companies. It had operating expenses of AED 2,000,000.
ABC LLC therefore has Revenue of AED 2,500,000, costs of AED 2,000,000 and a profit of AED 500,000. However, the costs and profit are not relevant for the purposes of assessing whether ABC LLC is eligible for Small Business Relief. ABC LLC will be eligible because its Revenue is below the threshold of AED 3,000,000.
Example 8: Sale of Business asset during a Tax Period
Mr X is a Resident Person for Corporate Tax purposes. He has conducted a Business for many years and his Revenue has never exceeded AED 3,000,000. In the Tax Period ending on 31 December 2024, his Revenue was AED 1,850,000 and he elected for Small Business Relief.
During the Tax Period ending 31 December 2025, Mr X agreed to sell his shop to a friend for AED 1,200,000. Mr X’s Revenue for the Tax Period, including the proceeds from the sale of the shop, totaled AED 4,150,000.
Mr X is not eligible for Small Business Relief for the Tax Period ending 31 December 2025. The fact that Mr X’s Revenue has exceeded the Revenue threshold as a result of a one-off event is not relevant. Because Mr X’s Revenue exceeded AED 3,000,000, he will not be able to elect for Small Business Relief again, even if his Revenue in the Tax Period ending 31 December 2026 is less than AED 3,000,000.
Example 9: Resident Person anticipates exceeding the Revenue threshold
ABC LLC is a Resident Person for Corporate Tax purposes. ABC LLC has been conducting Business for a number of years but has never generated Revenue of more than AED 2,000,000. ABC LLC elected for Small Business Relief for the Tax Period ending 31 December 2024.
At the beginning of 2025, one of ABC LLC’s competitors ceased trading suddenly and ABC LLC experienced a huge increase in sales as a result. ABC LLC now forecasts that for the Tax Period ending on 31 December 2025, it will have Revenue of more than AED 5,000,000.
ABC LLC does not need to do anything different immediately. However, if its Revenue for the 31 December 2025 Tax Period does exceed AED 3,000,000, it will no longer be eligible for Small Business Relief. It will have to calculate and pay Corporate Tax on its Taxable Income.
In this regard, ABC LLC will need to consider all the relevant provisions of the Corporate Tax Law, including any reliefs which might be applicable.
Example 10: Carried forward unutilized Tax Losses
Mr X is a Resident Person. In the Tax Period ending 31 December 2024, his Revenue was AED 2,500,000. Mr X did not elect for Small Business Relief and had a Tax Loss of AED 400,000 to carry forward.
In the Tax Period ending 31 December 2025, Mr X’s Revenue was AED 1,700,000.
Mr X elects for Small Business Relief for the Tax Period ending 31 December 2025. His carried forward Tax Losses of AED 400,000 cannot be used in this Tax Period, but will be carried forward and can be used in future Tax Periods (provided the relevant conditions are met).