Small Business Relief in the UAE: What You Need to Know to Stay Compliant and Save More

If your UAE business earns AED 3 million or less, the government’s basically saying, “Keep your coins!” From June 2023, Small Business Relief (SBR) lets you skip corporate tax until 2026. That’s three tax-free years—legally.

SBR is part of the UAE’s broader effort to support entrepreneurship and ease the transition into the new tax regime. Whether you're a freelancer, a lean startup, or a local service provider, this provision could mean thousands of dirhams saved and fewer compliance headaches.

If you're a small business owner aiming to stay compliant then this might just be the most valuable update you'll come across this year.

What Is Small Business Relief?
Small Business Relief is a provision introduced by the UAE Ministry of Finance as part of the new Federal Corporate Tax Law (Federal Decree-Law No. 47 of 2022). The goal is to reduce the compliance burden on micro and small businesses and encourage entrepreneurship in the region.

Under this relief, eligible small businesses are treated as having no taxable income, meaning they won't pay corporate tax and can avoid complex filing requirements; as long as their revenue stays within the defined threshold.

Who Is Eligible for Small Business Relief?

To qualify for Small Business Relief, your business must meet the following criteria:

• Revenue Threshold: Your total revenue must be AED 3 million or less in the relevant tax period and all previous tax periods ending on or before 31 December 2026.
  
  
• Residency: The business must be a resident person in the UAE.
  
  
• Not a Qualifying Free Zone Person: If you're registered in a free zone and benefit from the 0% tax regime, you cannot apply for Small Business Relief.
  
  
• Not a Member of a Multinational Enterprise Group (MNE): MNEs with consolidated global revenues over AED 3.15 billion are excluded.
  
  

What Are the Benefits?

1. No Corporate Tax Liability:
   If you elect for Small Business Relief and qualify, you’ll be treated as having zero taxable income, meaning no corporate tax to pay for that year.
   
   
2. Reduced Compliance Requirements:
   Eligible businesses will have a simplified filing process, saving time and money on accounting and audit services.
   
   
3. Encouragement to Grow:
   With less tax pressure and more retained income, you have more room to reinvest in your business and scale strategically.
   
   

How to Elect for Small Business Relief?

Eligible businesses must formally elect for the relief when filing their corporate tax return. This means:

• Submitting your tax return on time via the Federal Tax Authority (FTA) portal.
• Clearly electing for relief during the filing process.
• Keeping proper financial records that prove your revenue did not exceed AED 3 million.

It’s essential to maintain accurate bookkeeping and supporting documentation. The FTA can request records at any time to verify eligibility.

Caution: Anti-Abuse Rules Apply

Small Business Relief isn’t a loophole, it’s a support mechanism. The law includes anti-abuse provisions to prevent businesses from artificially splitting or restructuring operations to qualify for the relief.

For example, if a larger company tries to divide its operations into smaller entities just to stay under the AED 3 million threshold, it risks penalties, audits, and disqualification from the relief.

When Does This Relief Apply?

The Small Business Relief applies to tax periods starting on or after 1 June 2023, and only for financial years ending before 31 December 2026.

If your business crosses the AED 3 million revenue threshold during this time, you’ll be subject to the standard corporate tax rate of 9% on taxable income above AED 375,000 from that point onward.

Stay Ahead by Staying Informed

Small Business Relief in the UAE offers real, practical support for entrepreneurs, startups, and micro-enterprises navigating the early stages of growth. But as with all tax matters, compliance is key.

By understanding your eligibility, keeping clean financial records, and making timely filings, you can maximize the benefits of this relief and position your business for a sustainable future.

Need help navigating corporate tax or claiming Small Business Relief? Our tax experts are here to guide you every step of the way—from assessing eligibility to filing your returns with confidence.

Let us take care of the numbers, so you can focus on what you do best: growing your business.

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