The UAE Corporate Tax regime includes a temporary Small Business Relief (SBR) to ease the compliance burden on smaller businesses during the transition period. If eligible, you can elect in your Corporate Tax return to be treated as having no Taxable Income for that Tax Period.
Key takeaway:
- SBR is an election (not automatic) made in the Corporate Tax return.
- Only Resident Taxable Persons can elect (Non-Residents cannot).
- Revenue must be AED 3,000,000 or less in the relevant Tax Period and all previous Tax Periods within the relief window.
- SBR is available only for Tax Periods that begin on/after 1 June 2023 and end on/before 31 December 2026.
- Qualifying Free Zone Persons (QFZPs) and members of large Multinational Enterprise (MNE) Groups are excluded.
Legal basis (official reference points)
- Federal Decree-Law No. 47 of 2022 (UAE Corporate Tax Law) – Article 21 (Small Business Relief).
- Ministerial Decision No. 73 of 2023 – sets the AED 3 million revenue threshold and the 31 December 2026 end date.
Who is eligible?
To elect Small Business Relief, all of the conditions below must be met:
1) You are a Resident Taxable Person
SBR is available only to Resident Persons for Corporate Tax purposes who are subject to Corporate Tax (i.e., a ‘Taxable Person’). In practice this generally includes:
- UAE-incorporated (or effectively managed and controlled) companies and other juridical persons that are Resident Persons; and
- Natural persons carrying on a Business or Business Activity in the UAE that is within the scope of Corporate Tax.
Non-Resident Persons cannot elect SBR, even if they have a UAE branch or a UAE presence.
Tip for individuals: Natural persons generally become subject to UAE Corporate Tax only once their Business/Business Activity exceeds the relevant turnover threshold (currently AED 1 million). If you are below that threshold, you may be outside the Corporate Tax filing regime and SBR may not be relevant.
2) Revenue is AED 3,000,000 or less (and stays that way in prior periods)
Your Revenue must not exceed AED 3,000,000 in the relevant Tax Period and in any previous Tax Periods within the relief window. Once Revenue exceeds AED 3,000,000 in any relevant or previous Tax Period, you cannot elect SBR in later periods (even if Revenue falls again).
Important technical points:
- The AED 3,000,000 threshold applies only to Tax Periods that begin on or after 1 June 2023 and end on or before 31 December 2026.
- Revenue is determined in accordance with the applicable accounting standards accepted in the UAE (it is effectively the same as turnover).
- When testing the AED 3,000,000 threshold, Revenue can include amounts that may otherwise be ‘Exempt Income’ for Corporate Tax (for example, qualifying dividends).
3) You are not part of a large Multinational Enterprise (MNE) Group
You cannot elect SBR if you are a Constituent Company of an MNE Group where the consolidated group revenue is AED 3.15 billion or more (the OECD Pillar Two threshold).
4) You are not a Qualifying Free Zone Person (QFZP)
A Qualifying Free Zone Person (QFZP) cannot elect Small Business Relief. However, a Free Zone company that is not a QFZP (or that elects to be taxed under the standard Corporate Tax regime) may be able to elect SBR if all other conditions are met.
What happens when you elect SBR?
If you elect SBR for a Tax Period:
- You are treated as having no Taxable Income for that Tax Period (so no 9% Corporate Tax is payable for that period).
- Other Corporate Tax reliefs, exemptions and deductions that rely on a Taxable Income computation generally do not apply for that Tax Period.
- Any Tax Loss incurred in the Tax Period where SBR is elected cannot be carried forward.
- Unutilised Tax Losses from earlier Tax Periods (where SBR was not elected) can still be carried forward to future Tax Periods where you do not elect SBR (subject to the normal conditions).
Transfer Pricing (common misconception):
If you elect SBR, the transfer pricing documentation requirements do not apply for that Tax Period. However, you still need to comply with the arm’s length principle for transactions with Related Parties and Connected Persons.
Does SBR remove filing obligations?
No. If you are a Taxable Person, you still need to register (where required), file a Corporate Tax return, and make the SBR election within the return. You should also maintain adequate records and be ready to provide supporting documentation if requested by the FTA.
VAT is separate:
SBR relates only to Corporate Tax. It does not change your VAT registration, invoicing, or VAT return obligations.
When SBR may not be ideal
SBR is a strategic election. Consider a review if any of the below apply:
- You expect significant losses and want those losses to be recognised (and potentially carried forward) rather than disregarded in an SBR period.
- You are close to the AED 3 million threshold (a one-off transaction may push Revenue over the limit and permanently remove SBR eligibility).
- You plan group structuring, acquisitions, or reorganisations and may want access to the Corporate Tax reliefs that are not available in an SBR period.
- Banks or investors require a full taxable-income style computation and supporting schedules.
Practical examples
Example 1: Eligible SME remains below the threshold
A UAE consultancy has Revenue of AED 1.9m (2024), AED 2.5m (2025), and AED 2.8m (2026). Assuming it is a Resident Taxable Person and not excluded (not an MNE constituent and not a QFZP), it can elect SBR for those Tax Periods.
Example 2: One-off sale pushes Revenue above AED 3m
A business had always remained under AED 3m, but in 2025 it sells a business asset and total Revenue for the Tax Period becomes AED 4.15m. It cannot elect SBR for 2025, and it will not be able to elect SBR again in later Tax Periods within the relief window
Example 3: Exempt income can still count for the threshold
A company has operating sales of AED 2.5m and receives qualifying dividends of AED 1.0m. Even if the dividends are Exempt Income for Corporate Tax purposes, they may be included when assessing the Revenue threshold, taking total Revenue to AED 3.5m—so SBR would not be available.
Quick eligibility checklist (what to gather)
- Latest financial statements/management accounts showing Revenue (turnover) under UAE accepted accounting standards.
- Confirmation of prior-period Revenue (for Tax Periods within the relief window).
- Group structure and whether you are part of an MNE Group (and consolidated group revenue).
- Free Zone status: whether the entity qualifies as a QFZP and whether any election to be taxed under the standard regime is planned.
- Related party transactions summary (arm’s length compliance still matters).
How Peakvisory FZC can help
Peakvisory FZC supports SMEs with end-to-end Corporate Tax compliance and planning, including:
- SBR eligibility assessment and Revenue threshold monitoring
- Free Zone vs Mainland structuring (including QFZP considerations)
- Corporate Tax registration, return preparation and filing support
- Transfer pricing practical support (arm’s length alignment and supporting documentation)
Disclaimer: This article is for general informational purposes only and reflects publicly available UAE Corporate Tax guidance at the time of writing. It does not constitute tax advice. Professional advice should be obtained based on your specific facts and circumstances.