Certain resident juridical persons in the UAE are exempt from corporate tax, including government entities, government-controlled entities, and businesses with revenue below Dh1 million. Other entities, such as pension funds and investment funds, are obligated to register but can apply for exemption after registration. Small business relief is available for businesses with revenue below Dh3 million until December 31, 2026.
Qualified free zone persons (QFZPs) earning income from transactions with free zone and non-free zone persons are taxed at a zero per cent rate, subject to certain criteria. Interest capping rules do not apply to specific entities like banks and insurance companies, with exceptions for certain cases where taxpayers can claim a higher amount. Business restructuring relief is available when transferring businesses under common ownership of 75 per cent, with specific conditions met.
Taxable persons can transfer tax losses or assets and liabilities under common ownership of 75 per cent. They also have the option to establish a tax group with at least 95 per cent common ownership, allowing offsetting of tax losses among group members. Dividends and profit distributions received from resident or non-resident juridical persons are exempt from corporate tax. Gains from the pre-tax era can be exempted, and taxpayers can choose either the realisation or accrual basis for gains.
Businesses with taxable revenue below Dh50 million are not required to have signed financial statements or adhere to full IFRS standards. Tax losses can be carried forward indefinitely with a minimum 50 per cent continuity of ownership or business. These provisions offer significant relief to businesses, provided they meet the necessary conditions before opting for any relief or exemption.
In conclusion, the UAE offers various reliefs and exemptions for businesses to ease their tax burdens. It is essential for businesses to understand the eligibility criteria and conditions for each relief before applying. Seeking professional advice and ensuring compliance with tax regulations are vital to make the most of these opportunities. Overall, these provisions aim to support businesses in the UAE and promote economic growth and development in the region.
