Conditions
The Small Business Relief only applies to a “Resident Person”. This is defined broadly, incorporating a managed and controlled test and an incorporation test, both of which derive from international tax principles.
The legislation precludes a Resident Person who claims Small Business Relief from claiming various other reliefs and deductions in the same tax period.
The following are precluded from making a Small Business Relief election:
- a Constituent Company of a Multinational Enterprises Group with a consolidated revenue exceeding AED 3.15 billion; and
- a Qualifying Free Zone Person (i.e. a legal person incorporated, established or otherwise registered in a Free Zone).
Article 21 of the Corporate Tax Law specifies that Small Business Relief must be claimed by way of an election. As such, it does not apply automatically. Regardless of whether the relief is claimed, Taxable Persons will be under an obligation to register for and file corporate tax returns. It would be reasonable to assume that the Small Business Relief election would be made as part of the annual corporate tax return filing process, however, at this stage the procedure for making the election has yet to be confirmed.