UAE Small Business Relief Explained: Eligibility, Benefits & Tax Filing Guide (2025–2026)
With the introduction of Corporate Tax in the United Arab Emirates in June 2023, small businesses have been presented with a new set of financial responsibilities. However, to support the country’s entrepreneurial landscape, the Federal Tax Authority (FTA) introduced a Small Business Relief (SBR) initiative aimed at reducing the burden on smaller enterprises.
This blog explores what Small Business Relief is, who qualifies, who doesn’t, and how small businesses in the UAE can take advantage of this beneficial regime.
What is Small Business Relief?
Small Business Relief (SBR) is a tax benefit introduced under the UAE Corporate Tax Law that allows eligible Resident Taxable Persons to be treated as if they have not earned any taxable income for a specific tax period. In essence, qualifying small businesses can elect to pay 0% Corporate Tax if they meet the revenue threshold and other conditions.
Why Was This Relief Introduced?
The UAE introduced its first Corporate Tax system to align with global tax transparency standards and diversify its revenue base. Recognizing that small businesses may not have the resources to navigate complex tax systems, the UAE Ministry of Finance provided a special provision—Small Business Relief—to:
- Minimize compliance and documentation burdens
- Enhance cash flow and operational efficiency
- Promote a thriving, business-friendly environment
Who Can Apply for Small Business Relief?
To qualify for the Small Business Relief regime, the applicant must meet all of the following conditions:
1. Resident Person
- The business owner must be a Resident Taxable Person in the UAE.
- This includes both natural persons (self-employed individuals) and juridical persons (legal entities like LLCs).
- 2. Revenue Threshold
- Annual revenue must not exceed AED 3,000,000 for the current tax period and all previous tax periods up to and including December 31, 2026.
2. Revenue Threshold
- Annual revenue must not exceed AED 3,000,000 for the current tax period and all previous tax periods up to and including December 31, 2026.
3. SBR Election
- The taxpayer must elect to apply SBR by indicating it on their Corporate Tax return for the relevant period.
Who Cannot Apply?
Not all businesses are eligible for the Small Business Relief. Here are the categories that are excluded:
1. Multinational Enterprise (MNE) Groups
- Any business that is part of a Multinational Group with global consolidated revenues exceeding AED 3.15 billion is ineligible.
2. Qualifying Free Zone Persons
- Businesses registered in designated Free Zones that already benefit from 0% Corporate Tax on qualifying income cannot apply for SBR.
Example: Understanding Eligibility
Mr. Z, a resident business owner in Abu Dhabi, operates a small consultancy firm.
- Revenue for 2025: AED 2,700,000
- Revenue for 2026: AED 2,900,000
✅ Mr. Z qualifies for Small Business Relief in both years because his revenue stayed under AED 3,000,000 throughout all relevant periods.
Ms. A, on the other hand, had:
- Revenue for 2025: AED 4,000,000
- Revenue for 2026: AED 2,500,000
❌ Ms. A is not eligible in 2026, because she exceeded the threshold in 2025.
Key Benefits of Small Business Relief
Small Business Relief offers a wide range of advantages that go beyond tax exemption:
0% Corporate Tax
Eligible businesses are treated as having no taxable income, reducing their tax bill to zero for the applicable period.
Simplified Tax Compliance
- No need to calculate taxable income
- No transfer pricing documentation required
- Easier financial record-keeping
Better Cash Flow
With no tax liability, businesses can reinvest more in:
- Growth initiatives
- Employee benefits
- Operational upgrades
Lower Administrative Costs
By eliminating the need for complex tax filing processes and audits, businesses save time and professional service fees.
Compliance and Record-Keeping Requirements
Even if a business qualifies for SBR, it must still meet basic compliance expectations.
Tax Return Filing
- The business must file a Corporate Tax return and elect for SBR in the relevant tax period.
Maintain Financial Records
- Keep accurate records including invoices, receipts, bank statements, and financial statements.
💡 Pro Tip: While there is no official retention period, best practice is to keep financial documents for at least 5 years.
How to Claim Small Business Relief
Follow these steps to claim your tax relief:
- Engage a Corporate Tax Consultant
Partner with a registered tax agent or accounting firm familiar with UAE CT laws. - Prepare Financial Statements
Ensure your financial reports show that your revenue is below the AED 3 million threshold. - Elect SBR During Filing
Indicate your intention to apply for Small Business Relief on your Corporate Tax return submission. - Keep Records Organized
Use cloud-based tools or accounting platforms to maintain your documentation securely.
Final Thoughts
The UAE’s Small Business Relief regime is a smart, strategic initiative for entrepreneurs and SMEs. It reduces the financial and administrative burden of Corporate Tax and helps businesses channel resources toward growth, hiring, and innovation.
To avoid errors or missed opportunities, always consult a tax professional before filing.
Need Help Filing for Small Business Relief?
If you’re unsure whether your business qualifies, or want to simplify the filing process, our expert tax team is here to help. Contact us today and make the most of UAE’s tax relief benefits for small businesses.
