Small Business Relief UAE Corporate Tax: Full Guide for SMEs

What is Small Business Relief (SBR)?

Small Business Relief is a tax exemption scheme under Federal Decree-Law No. 47 of 2022 and Ministerial Decision No. 73 of 2023, allowing eligible small businesses to be treated as if they have zero taxable income for a given tax period.

Key Points:

• Available for tax periods from 1 June 2023 to 31 December 2026.
• Applicable to UAE-resident businesses with annual revenue not exceeding AED 3 million.
• Designed to support SMEs and startups, helping preserve cash flow and simplify compliance.

Who is Eligible for Small Business Relief?

To qualify for SBR, businesses must meet all of the following criteria:

Important: Eligibility is based on gross revenue, not profit. High turnover with low profit may still disqualify a business.

Benefits of Small Business Relief

• 1. Zero Corporate Tax Liability – Eligible businesses pay 0% corporate tax for the period.
• 2. Simplified Compliance – Less paperwork and easier tax reporting.
• 3. Cash Flow Preservation Funds can be reinvested in growth, operations, or working capital.

Trade-offs & Considerations

• Losses and interest expenses: Tax losses or disallowed interest in periods where SBR is elected cannot be carried forward.
• Anti-abuse risk: Artificially splitting businesses to stay under AED 3 million may trigger FTA scrutiny under anti-abuse rules.
• SBR is temporary: After 31 December 2026, normal corporate tax rules apply (9% on taxable profit above the threshold).
• Annual election required: SBR must be elected in each relevant tax return; it is not automatic.

Step-by-Step Guide: How to Apply for SBR

• Step 1: Register for Corporate Tax
  Even if eligible for SBR, businesses must register with the FTA via the EmaraTax portal.
• Step 2: Maintain Accurate Accounting Records
  Track revenue using UAE-accepted accounting standards (commonly IFRS).
• Step 3: Elect SBR During Filing
  When completing your corporate tax return, select “Elect Small Business Relief” and confirm revenue eligibility.
• Step 4: Keep Supporting Records
  Retain sales invoices, accounting reports, and bank statements in case of FTA queries.
• Step 5: Submit Your Return
  Submit the return through EmaraTax. Once accepted, your taxable income is treated as zero.

Key Deadlines

Tax Year	Application Deadline	Revenue Threshold
2024	March 2025	AED 3 million
2025	March 2026	AED 3 million
2026	March 2027	AED 3 million

Apply before the Corporate Tax deadline to avoid fines or missing out on the relief.

Expert Guidance

At BSD Prime Services, we help small businesses, startups, and freelancers navigate UAE Corporate Tax and Small Business Relief with ease. Our FTA-approved consultants guide you through:

• 1. Registration
• 2. Revenue verification
• 3. SBR election
• 4. Compliance and submissions

Contact Us:

Phone: +971 50 710 3139

Email: info@primeservicesdubai.com

Let us handle the technicalities so you can focus on growing your business.

Common Questions (FAQs)

• 1. Do I need to register for corporate tax if my turnover is below AED 3 million?

  Yes. Registration is mandatory. SBR only affects your taxable income, not your registration obligation.

• 2. Is SBR automatic?

  No. Eligible businesses must elect SBR in each tax return period.

• 3. Can I split my business into multiple entities to claim SBR?

  This is risky. Artificial splits may violate anti-abuse provisions and disqualify your claim.

• 4. Are Free Zone companies eligible?

  Only if they are not Qualifying Free Zone Persons and meet other eligibility criteria.

• 5. Can I carry forward losses if I elect SBR?

  Generally, no. Losses or disallowed net interest incurred during SBR periods cannot be carried forward.

• 6. When does SBR end?

  31 December 2026. After that, normal corporate tax rules apply.