19 August 2026 · Eligibility
UAE Small Business Relief Eligibility
A resident taxable person whose revenue does not exceed AED 3 million in the relevant tax period and in each previous tax period can elect Small Business Relief under Ministerial Decision No. 73 of 2023, and be treated as having no taxable income for that period, so no corporate tax is due. It is a transitional measure, available for tax periods ending on or before 31 December 2026, and the election must be made in the return itself; it is never applied automatically. You still have to register for corporate tax, file a return declaring the election, and keep records that prove the revenue test was met, though businesses at this scale can use the cash basis of accounting, which keeps that record-keeping simple. The test looks at the person, not the licence, so revenue from related activities under the same owner is added together before it is checked against the AED 3 million ceiling.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
Who can elect it
Eligibility is a revenue test, applied period by period rather than judged once and forgotten. Revenue means total turnover before expenses, not taxable profit, so a business can have a modest profit margin and still fail the test if turnover itself is high. The comparison runs across the current period and every previous tax period the entity has had, which means one strong year in the past can rule out relief even if the current year looks small.
- Revenue up to AED 3 million in the current and every previous tax period.
- Must be a resident taxable person under the Corporate Tax Law.
- Available for tax periods ending on or before 31 December 2026.
- You elect it in the return, it is not automatic or default.
- Revenue is turnover before expenses, not net taxable profit.
- The AED 3 million ceiling is tested against total revenue, not each activity separately.
What you give up
Relief simplifies the current period but is not free of cost. While the election stands, tax losses generated in that period cannot be carried forward to offset future profits, and neither can any unused interest deduction capacity from that period. For a business that is investing heavily or expects a lean year, giving up that carry-forward can outweigh the value of a nil tax bill.
- While elected, you cannot use tax losses in that period.
- Excess interest deduction capacity arising in that period is also lost, not carried forward.
- Certain other deductions are unavailable while the election applies.
- You still must register and file a return declaring the election.
- It may not suit a loss-making, capital-intensive, or fast-growing business.
- The election is made period by period, so this year's choice does not bind next year.
What the AED 3 million test looks like in practice
Take a Dubai consultancy with revenue of AED 2.8 million and taxable profit of AED 500,000 for the period. Because revenue sits under the AED 3 million ceiling in both the current and prior periods, it can elect Small Business Relief and be treated as having no taxable income, so corporate tax payable is AED 0. Had revenue instead been AED 3.2 million, the business would fail the test regardless of how small its profit was, and the standard 0%/9% bands would apply instead.
- The test is revenue, not profit, so a low-margin business with high turnover can still fail it.
- A business at AED 2.8M revenue and AED 500,000 profit pays AED 0 if it elects relief.
- The same profit without relief is taxed under the standard bands: 0% up to AED 375,000, 9% above.
- Revenue just above AED 3 million disqualifies the election entirely, however small the resulting saving would have been.
Why splitting a business does not work
Some businesses are tempted to spread turnover across multiple licences or entities so that each one individually sits under AED 3 million. The Small Business Relief rules and the Corporate Tax Law's general anti-abuse provisions specifically target this: the revenue test looks at the person, not the licence, so all activities carried out by the same natural or juridical person are added together. Where the FTA finds an arrangement was structured mainly to stay under the threshold, it can aggregate the revenue, deny the relief, and assess tax with penalties on top.
- The revenue test aggregates all activities of the same person, not just one licence.
- Artificial separation of a single business across entities is treated as an abuse risk, not a planning technique.
- A denied election can mean back tax plus penalties, not just a missed relief.
- Genuine multi-entity structures are unaffected, the concern is deliberate splitting to defeat the AED 3 million test.
Frequently Asked Questions
For small Dubai businesses weighing Small Business Relief, these are the questions we are asked most often.
What is the revenue limit for Small Business Relief?
AED 3 million in the relevant tax period and in every previous tax period, tested against a resident taxable person's total revenue rather than its taxable profit. The comparison is cumulative, so a single high-revenue year in the past can disqualify an otherwise small current-year business.
How long is Small Business Relief available?
It is a transitional measure available for tax periods ending on or before 31 December 2026 under Ministerial Decision No. 73 of 2023. It is not a permanent feature of the corporate tax regime, so businesses relying on it should plan for the standard 0%/9% bands afterwards.
Do I still file a return if I elect it?
Yes. You must register for corporate tax, file a return for the period, and elect the relief within that return, since it is never applied automatically. Businesses with revenue up to AED 3 million can also use the cash basis of accounting, which simplifies the underlying bookkeeping.
Should everyone under AED 3M elect it?
Not necessarily. If you have tax losses or unused interest capacity you would rather carry forward, electing relief can cost more than it saves. Exiloz models both the relief and the standard-bands outcome on your actual numbers before you decide.
Can I split my business across multiple licences to stay under AED 3 million?
No. The revenue test looks at the person, not the licence, so activities carried out by the same owner are aggregated. The FTA treats deliberate splitting as an abuse of the relief and can deny it, aggregate the revenue, and assess tax with penalties.
Is revenue the same as profit for this test?
No. The AED 3 million ceiling is measured against total revenue, meaning turnover before expenses, not taxable profit. A business with thin margins but high turnover can fail the test even though its tax exposure, had it not qualified, would have been small.
Can Exiloz confirm my eligibility?
Yes. We check your revenue across the current and previous periods, confirm you are a resident taxable person, and model whether electing relief or staying in the standard regime leaves you better off before anything is filed.
Check your Small Business Relief position
Exiloz reviews your revenue history, confirms eligibility for Small Business Relief, and models whether electing it beats the standard 0%/9% bands for your business.