What is small business relief in UAE corporate tax?
An election letting resident businesses with revenue of AED 3 million or less be treated as having no taxable income for the period — no tax due, simplified compliance.
Small Business Relief
Small Business Relief: Paying Zero Corporate Tax Under AED 3 Million
Small business relief is the regime's pressure valve for small companies: elect it while revenue stays within AED 3 million and the period produces no taxable income at all. It is an election, not an exemption — you still register, still file, and still have to choose it wisely.
- Eligibility verified across all relevant periods
- The election filed correctly in your return
- Losses and interest trade-offs explained before electing
- Exit planning for the year you outgrow it
Dubai-based, FTA-aware corporate tax filing support for UAE businesses.
Quick Answer
A resident taxable person with revenue of AED 3 million or less in the current and all previous tax periods (for periods ending on or before 31 December 2026) can elect small business relief — the period is treated as producing no taxable income, so no tax is due. QFZP-claiming free zone entities and members of large multinational groups are excluded. The relief must be elected in the return, and it suspends loss carry-forward and interest deductions for that period.
AED 3mRevenue ceiling — every period counts
0Taxable income when elected
2026Periods ending by 31 Dec 2026
ElectionClaimed in the return, not automatic
The Eligibility Tests
The ceiling is unforgiving: AED 3 million revenue in the current period and every prior period under the regime. Breach it once and the relief is gone for good, even if revenue later falls. Revenue means gross income, not profit — a low-margin trader can be highly profitable-adjacent and still fail on turnover.
- Resident taxable persons only (companies and individuals)
- Revenue ≤ AED 3m in current and all earlier periods
- Excluded: QFZP claimants and constituent members of large MNE groups
- One historical breach permanently ends eligibility
What the Election Actually Does — and Costs
Electing SBR deems the period to have no taxable income: no tax, and a dramatically simplified computation. The trade-offs are real, though. Losses that would have arisen cannot be carried forward from an SBR period, and net interest expense from it cannot be banked either. A start-up burning cash may be better served by skipping the relief and preserving its losses for profitable years.
- No taxable income, no tax for the elected period
- Simplified compliance and record demands
- No loss carry-forward generated from the period
- Unused interest capacity from the period is lost
Planning Around the Horizon
The relief currently covers tax periods ending on or before 31 December 2026 — so businesses should treat it as a runway, not a permanent state. The planning questions: elect or preserve losses this year, manage revenue recognition near the AED 3m line honestly, and prepare the full-computation discipline for the first post-relief period.
- 1Confirm eligibility across all periods to date
- 2Model electing vs preserving losses on real numbers
- 3Elect in the return where it wins
- 4Build full computation readiness for life after SBR
Small Business Relief UAE FAQs
Who cannot claim small business relief?
Qualifying free zone persons and members of multinational groups above the large-group threshold — and anyone whose revenue ever exceeded AED 3m in a prior period.
Do I still file a return if I claim the relief?
Yes — registration and filing remain mandatory. The relief is claimed inside the return; skipping the return forfeits everything and accrues penalties.
Is claiming SBR always the right choice?
No — electing it sacrifices loss carry-forward and interest banking from the period. Loss-making startups sometimes do better without it.
How long will the relief exist?
It applies to tax periods ending on or before 31 December 2026 under current rules — plan for full computations afterwards.
Under AED 3 Million? Decide Deliberately
SBR is free money for some businesses and a losses trap for others. We will model both paths on your numbers and file the election only where it wins.
