Is my company eligible for 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 21 – Small Business Relief 1. A Taxable Person that is a Resident Person may elect to be treated as not having derived any Taxable Income for a Tax Period where: a. the Revenue of the Taxable Person for the relevant Tax Period and previous Tax Periods does not exceed a threshold to be set by the Minister; and b. the Taxable Person meets all other conditions prescribed by the Minister. 2. Where Clause 1 of this Article applies to a Taxable Person, the following provisions of this Decree-Law shall not apply: a. Exempt Income as specified in Chapter Seven of this Decree-Law. b. Reliefs as specified in Chapter Eight of this Decree-Law. c. Deductions as specified in Chapter Nine of this Decree-Law. d. Tax Loss relief as specified in Chapter Eleven of this Decree-Law. e. Article 55 of this Decree-Law. 3. The Authority may take the necessary measures to verify the compliance with the conditions of Clause 1 of this Article, and may request any relevant information or records from the Taxable Person within the timeline prescribed by the Authority. Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 28 Chapter Seven – Exempt Income

Eligibility conditions for Small Business Relief In order to be able to elect for Small Business Relief, a Person must be a Resident Person for Corporate Tax purposes and have Revenue of less than or equal to AED 3,000,000 in the relevant Tax Period and any previous Tax Periods. There are no additional requirements. The only exception is that members of MNEs and Qualifying Free Zone Persons are not eligible for Small Business Relief. See Section 3.1. for more details on MNEs and Qualifying Free Zone Persons. Restriction to Tax Periods ending on or before 31 December 2026 Small Business Relief will be available for Tax Periods that begin on or after 1 June 2023. Small Business Relief will be available for Tax Periods that end before or on 31 December 2026 in which the Revenue in the relevant Tax Period and all previous Tax Periods was less than or equal to AED 3,000,000. Illustrative examples Example 1: Electing for Small Business Relief Mr X operates a Business in Abu Dhabi. He is a Resident Person for Corporate Tax purposes. He started trading on 1 January 2025 and his Tax Period ends on 31 December. In the most recent Tax Period ending 31 December 2025, Mr X derived Revenue of AED 2,000,000. Mr X is eligible to benefit from Small Business Relief because he is a Natural Person with a Business or Business Activity generating Revenue in excess of AED 1,000,000 and less than AED 3,000,000 for the 31 December 2025 Tax Period. Mr. X has not breached the Revenue threshold from previous periods given that the 2025 Tax Period is his first year of operation. If he wishes to benefit from Small Business Relief, he must make an election in his Tax Return. Example 2: Non-Resident Persons ABC Ltd is a USA-incorporated company that has an office in Dubai from which it assists its UAE-based clients. ABC Ltd is a Non-Resident Person for Corporate Tax purposes. In its most recent Tax Period ending 31 December 2024, ABC Ltd derived Corporate Tax Guide | Small Business Relief | CTGSBR1 19

5 Are there any special reliefs available to small businesses? A small business that is a Taxable Person and a Resident Person may be eligible to make an election for Small Business Relief. Where a valid Small Business Relief election is made, the compliance obligations are reduced as follows: - Ordinarily, Taxable Persons would calculate their Taxable Income by adjusting their Accounting Income for the Corporate Tax treatment of certain income and expenditure. By contrast, Small Business Relief treats eligible Taxable Persons as having no Taxable Income for the relevant Tax Period and, therefore, they do not need to calculate their Taxable Income or pay Corporate Tax. - Benefit of preparing a simplified Tax Return. - Simplified record keeping requirements, including the ability to prepare their 5 Financial Statements based on the cash basis of accounting. 6 What are the conditions to be eligible for Small Business Relief? To be eligible for Small Business Relief, the small business must meet all of the below conditions: - Be a Taxable Person (including a natural person). - Be a Resident Person. - The Revenue must be equal to or below AED 3 million in a relevant Tax Period and in each for the previous Tax Periods that end on or before 31 December 2026. Businesses should monitor any updates by the Ministry of Finance and the FTA for post-2026 provisions. - Cannot be a member of a Multinational Enterprise Group as defined in Cabinet Resolution No. 44 of 2020, nor be a Qualifying Free Zone Person. For further information on who is eligible for Small Business Relief, and the consequences of making a Small Business Relief election, please refer to the 6 relevant Ministerial Decision and guidance published on the FTA’s website . 5 Ministerial Decision No. 73 of 2023 on Small Business Relief for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. https://tax.gov.ae/en/legislation.aspx 6 Ministerial Decision No. 73 of 2023 on Small Business Relief for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. https://tax.gov.ae/en/legislation.aspx. Corporate Tax Guide - Small Business Relief. https://tax.gov.ae/en/taxes/corporate.tax/corporate.tax.guides.references.aspx