The UAE’s decision to extend corporate tax relief for small businesses until 2029 will give entrepreneurs the ability to survive regional challenges and global headwinds, business owners and experts have said.
The Ministry of Finance announced last week that small businesses with an annual revenue of up to Dh3 million ($816,880) can continue to claim relief until December 31, 2029.
Marie-Claire Accordino, founder of The Accounts Dept, a company that handles about 20 clients, told The National: “As a small business-owner myself, advising small businesses and start-ups, I welcome the Ministry of Finance's decision.”
“Essentially, start-ups are treated as having no taxable income for these periods, which signifies lower tax-compliance costs and liability, allowing them extra liquidity to focus on growing their business. This decision provides start-ups and small businesses with more cash during the critical early life-cycle of a business, allowing them to fund another hire, increase marketing budgets or even cover the rent.”
She said the decision would benefit consulting firms, professional service providers and tech start-ups who spend years building software with low revenue and high initial costs.
Lighten the load
Dr Daamini Shrivastav, an emergency department doctor who works in the sports rehabilitation field, launched an emergency tool kit last year that is being snapped up by UAE residents and people overseas.
She describes the extension as a “huge relief” for the fledgling business she cofounded with her friend, Dippesh Bhargava. “It’s gives you that little bit of breathing space, it takes a load off of you,” said Dr Shrivastav, 37, a Dubai resident.
“When we launched last year, we made sure we had enough stock to tide us over for what we projected our two-year sales would be. But we did not anticipate a war, a sudden surge of sales that impacted actual logistics.
“We're having to pay more, obviously our cost of business, day-to-day running is going up but the revenue is not quite matching. This gives a lot of relief. It is generous and considerate of the government.”
Describing Mr Bhargava and herself as “Dubai kids”, she said they deigned the Trooper Box to help a family ride out a storm. The business idea came after the superstorm that flooded sections of the country in April 2024.
The sturdy package comes loaded with essential items for a family of four including first-aid kit, food bars, electrolyte sachets, gloves, inflatable water wings, glow sticks, rescue blankets, waterproof matches and candles.
The Iran war resulted in a pick-up in business, with UAE residents buying the kit in addition to purchases from Europe.
“Nobody can predict anything about the current geopolitical conflict but this three-year tax decision helps because we can plan ahead,” Dr Shrivastav said. “The time crunch has been relieved, you can breathe and now we can make decisions on stock to purchase, how much inventory to store and on logistics.”
The small-business owner will save an estimated Dh25,000 per year due to the extension.
Rebuild confidence
Sheetal Soni, founding partner of financial advisory firm MICS, said swift UAE decisions help boost confidence.
“Initiatives like this shows how the government is thinking, giving small businesses a chance to survive, being empathetic to the needs of small businesses that set up their operations here,” said Mr Soni, who has worked in the UAE for more than two decades.
“After February 28 [when the Iran war broke out], it has been a challenging time and has shaken up people, and these steps will help building and rebuilding confidence when it comes to the policies in UAE.”
The proactive approach to extend tax relief reflects a broader strategy to shore up the UAE’s position as a global hub for investment.
“Government decisions have attracted global capital,” Mr Soni said. “A lot of people from all over the world have come to the UAE not only to do business, but to set up family offices, park their wealth, make succession structures tax efficient. This announcement shows the environment being created in the UAE when it comes to helping small business.”
The move will reinforce the country’s image as an attractive place for start-up ventures, he added.
“This does not put the burden of compliances on small businesses until they grow into larger business,” Mr Soni said. “They will not have to fill in a long form, do audits, or prepare full financial statements.”
