Can a member of a multinational group claim Small Business Relief?

Article 3 – Additional Conditions for Small Business Relief A Resident Person that elects to apply the Small Business Relief must not be any of the following: 1. A Constituent Company of a Multinational Enterprises Group as defined in Cabinet Decision No. 44 referred to. 2. A Qualifying Free Zone Person.

Article 2 – Taxable Person’s Revenue Threshold 1. For the purposes of the Small Business Relief referred to in Article 21 of the Corporate Tax Law (“Small Business Relief”), the Taxable Person’s Revenue threshold for the relevant Tax Period and previous Tax Periods shall be AED 3,000,000 (three million dirhams) for each Tax Period. 2. The threshold set out in Clause 1 of the Article shall apply to Tax Periods Ministerial Decision No. 73 of 2023 – Unofficial translation 1 commencing on or after 1 June 2023 and such threshold shall only continue to apply to subsequent Tax Periods that end before or on 31 December 2026. 3. A Taxable Person shall not be able to elect to apply the Small Business Relief if their Revenue in any relevant or previous Tax Period has exceeded the threshold set out in Clause 1 of this Article. 4. The Revenue for the purpose of this Article shall be determined in accordance with the applicable accounting standards accepted in the State.

If a juridical Resident Person that is eligible for Small Business Relief during the relevant Tax Period joins a Tax Group, it will no longer be eligible for Small Business Relief on a standalone basis as the Tax Group is treated as a single Taxable Person. The Small Business Relief would be applicable at the level of that single Taxable Person (i.e. the Tax Group) if the relevant conditions are met. Therefore, the Tax Group can only benefit from the Small Business Relief if on a consolidated basis: • the Tax Group has a Revenue below or equal to AED 3 million in a relevant Tax Period and all previous Tax Periods;57 and • none of the members of the Tax Group is a Constituent Company of a Multinational Enterprises Group that is required to prepare a Country-by-Country Report under the UAE’s Country-by-Country Reporting legislation.58 Example 9: Tax Group applies Small Business Relief In the current Tax Period, Company A, Company B and Company C form a Tax Group with Company A as the Parent Company, assuming that all other conditions are met. All three entities were formed in the current Tax Period. The Revenue of the members of the Tax Group in the current Tax Period, after eliminating Revenues earned from member of Tax Group, is as follows: • Company A: AED 1 million • Company B: AED 2 million • Company C: AED 0.5 million The Revenue of each member of the Tax Group on a standalone basis does not exceed AED 3 million in the relevant Tax Period or previous Tax Periods. However, the Small Business Relief is not available to the Tax Group since the total Revenue of the Tax Group (AED 1 million + AED 2 million + AED 0.5 million = AED 3.5 million) exceeds the AED 3 million threshold. 4.7. Financial Year condition 4.7.1. General A key aim of the Tax Groups regime is to reduce the number and overall burden of tax filings. For example, Taxable Persons might have different Financial Years which would require the apportionment of results and thus add a layer of complexity. 57 Article 2 of Ministerial Decision No. 73 of 2023. 58 Article 3(1) of Ministerial Decision No. 73 of 2023 and Cabinet Resolution No. 44 of 2020. Corporate Tax Guide | Tax Groups | CTGTGR1 39