With the UAE’s corporate tax system now firmly in place, small enterprises are getting a helping hand through a special provision known as Small Business Relief (SBR).
This initiative is designed to reduce tax costs and compliance burdens for smaller, resident businesses — especially start‑ups and micro enterprises — as the new regime settles in.
What Is Small Business Relief in the UAE?
Small Business Relief is a targeted tax‑relief measure under Article 21 of the UAE Corporate Tax Law that allows eligible resident businesses to be treated as having no taxable income for a given tax period, effectively removing their corporate tax liability for that period. It doesn’t abolish the tax entirely but exempts qualifying revenues from being taxed.
This relief is part of Ministerial Decision No. 73 of 2023, issued by the UAE Ministry of Finance, and is in effect for tax periods beginning 1 June 2023 through 31 December 2026.
Who Qualifies for Small Business Relief?
To benefit from this relief, your business must meet the following conditions:
1. Revenue Threshold — Under AED 3 Million
Your annual revenue must not exceed AED 3 million for the relevant tax period and all prior periods for which the relief is claimed. If any past tax period exceeds this threshold, your business will no longer be eligible for SBR in the current or future periods.
Important: This is based on your gross revenue, not net profit, and follows accounting standards accepted in the UAE.
2. Must Be a UAE Resident Person
The relief applies only to businesses that are resident in the UAE under the corporate tax law. This includes individuals and companies that are incorporated or effectively managed and controlled in the UAE.
3. Excluded Entities
Some entities cannot claim SBR, even if they meet the revenue test:
Qualifying Free Zone Persons: Entities in free zones that already benefit from a 0 % corporate tax on qualifying income are excluded.
Multinational Enterprise Groups (MNEs): Companies that are part of an MNE group with consolidated global revenues above AED 3.15 billion are not eligible.
These exclusions ensure the relief targets genuinely small, locally focused businesses rather than large, multinational operations.
How Small Business Relief Works in Practice
If you elect the Small Business Relief for a tax period:
Your business is treated as having zero taxable income for that period — which means no corporate tax will be payable for that year.
You must file a corporate tax return and actively elect the relief for each period; it isn’t automatically applied.
If you choose not to claim the relief, and you are eligible, your business can carry forward tax losses and disallowed net interest expense to use in future years when you might not claim SBR.
This choice offers flexibility, especially if your business has tax losses that could be more valuable in later years.
Practical Example
Imagine your business had:
Revenue of AED 2.7 million in 2024
Revenue of AED 2.9 million in 2025
Because both years stayed below the AED 3 million threshold, you could elect Small Business Relief for each period — meaning no corporate tax liability for those years. If revenue had exceeded AED 3 million in 2025, you would become ineligible for relief from that year onward.
Why This Matters for Small Businesses
For many UAE SMEs and start‑ups, Small Business Relief offers:
✅ Lower compliance costs — fewer calculations and simplified reporting
✅ Zero corporate tax liability for qualifying periods
✅ Greater focus on growth — with earnings retained in the business
✅ A smoother transition into the new tax regime
It’s designed to help small enterprises adapt without being overwhelmed by tax burdens in the early years of the system.
Things to Watch Out For
Revenue tracking: Even one tax period exceeding AED 3 million can bar access to the relief afterward.
Anti‑abuse rules: Artificially splitting business activities to stay under the threshold can trigger anti‑abuse measures by the Federal Tax Authority (FTA).
Election timing: You must choose Small Business Relief when filing your corporate tax return — it isn’t automatic.
Final Thoughts
The Small Business Relief provision under the UAE corporate tax regime is a meaningful support mechanism for resident small and micro businesses.
By setting a clear revenue limit and offering a period of reduced tax burden — up to the end of 2026 — the UAE government helps smaller enterprises focus on growth and stability as they scale.
Navigating Small Business Relief under the UAE corporate tax system can feel complex, but you don’t have to do it alone. Partnering with Fintrack Tax Consultants can help ensure your business meets eligibility requirements, claims the relief correctly, and stays fully compliant.
With our guidance, you can focus on growing your business while confidently managing your corporate tax obligations.
