About tax incentives for small businesses in the UAE

1st of September, 2023

In April this year, the Ministry of Finance of the United Arab Emirates decided to provide tax benefits to some representatives of small businesses. It is about companies whose annual revenue is less than 3 million AED inclusive (about 817 thousand US dollars). Such companies are considered not to receive taxable income. The legal provision will remain in force until the end of 2026, unless the Ministry of Finance decides to extend this period.

On August 28, the FTA ( UAE Tax Authority ) released guidance on the application of the above-mentioned exemptions. Let us review the main points.

  • To qualify for the benefits, a UAE resident individual or legal entity must first register itself as a corporate tax payer. After that, it will be possible to file a tax return taking into account the relevant exemption. Doing this once will not be enough: the choice of benefit must be either confirmed or changed at the end of each tax period. In other words, in order to take advantage of the exemption, it will be necessary to regularly file a tax return and remain registered as a corporate tax payer.
  • Companies that decide to take advantage of this incentive are exempted from the need to maintain transfer pricing documentation. However, the "arm's-length principle", which aims at adequate allocation of income tax entitlement between countries through TCOs, must be observed. For example, if you agree to cooperate with a partner on barter terms, the value of the goods/services received or provided must correspond to their market value.
  • Some companies can get this benefit without having UAE residency. This privilege is available to businesses operating in a country that has a SIDN (Double Taxation Avoidance Agreement) with the UAE.

FTA representatives noted that they will monitor the business sphere and search for facts of artificial division of business in order to receive the benefit. These are companies that will conduct fictitious manipulations in order not to exceed the AED 3 million mark of annual revenue.

How to get assistance in starting a company in the UAE

The decision of local authorities to introduce incentives is great news for entrepreneurs planning to open a company in the UAE. A developed market, a stable economy and low taxes for business is a formula that bodes well for profits.

To open a company in the UAE quickly and without any problems, contact Intelligent Solution Group for assistance. Our specialists will help you to avoid red tape and comply with legal requirements. We have accumulated vast experience - Intelligent Solution Group has been providing services on opening companies in UAE for more than 10 years.

Intelligent Solution Group employees will help you:

  • collect the required package of documents and register the company;
  • help you obtain a business license;
  • open an account in a neobank with a UAE license. Neobank is a local digital banking platform;
  • assist in real estate matters.

Intelligent Solution Group has a representative in Dubai. If desired, the client can meet him/her personally and discuss the details.