Dubai · UAE — GST +4
Tax · 9 MIN · Updated 21 Jul 2026

Small Business Relief: the closing window

The most generous line in UAE corporate tax law has an expiry date: relief for financial periods ending on or before 31 December 2026. If your revenue is at or under AED 3M, this year's election deserves ten deliberate minutes — and one real calculation.

Small Business Relief lets a UAE resident business with revenue at or below AED 3,000,000 elect to be treated as having no taxable income — the return is still filed, but the tax due is zero. It runs only for financial periods ending on or before 31 December 2026, and it must be claimed in the return, not applied by default. In our practice registering and running UAE companies, the relief is usually won or lost on two things: watching the 3M revenue line monthly, and not confusing it with the QFZP 0% regime.

Key takeaways
  • Revenue ≤ AED 3M → elect the relief → taxable income is treated as zero. The threshold is tested on revenue, not profit.
  • It applies only to financial periods ending on or before 31 December 2026 — a temporary relief with a printed expiry.
  • The relief is not automatic: miss the election in your return and you pay 9% above AED 375,000 as usual.
  • Shut out by design: constituent members of large multinational groups, and free zone companies claiming the QFZP regime.
  • Periods under relief build no carried-forward tax losses or net interest — a real cost if profit is coming.

What the relief actually does

Small Business Relief (Ministerial Decision No. 73 of 2023) is not a lower rate — it is a switch. A resident business that elects it is treated as having no taxable income for the whole period: the corporate tax return is still filed, but the tax due is zero. That is the difference between it and the automatic AED 375,000 threshold. The threshold shaves the first slice of profit; the relief looks at revenue and, if you are under the line, removes taxable income entirely — nothing above AED 375,000 is taxed either.

The relief also simplifies the sums. In a period under it you do not compute taxable income in the usual detail, and expenses are not deducted the ordinary way — there is simply no taxable base. But it is a filing, not a holiday from the system: you remain a registered taxpayer with a return to submit, and the relief is claimed inside that return.

Who qualifies — and who is shut out

The relief is for resident persons — a UAE company, or a natural person running a business — whose revenue stayed at or below AED 3,000,000 in the current period and in every previous tax period since the regime began. Two groups are shut out by design, however small their revenue:

StatusWho
EligibleResident company or individual with revenue ≤ AED 3M in the current and all prior periods
Not eligibleFree zone company claiming the QFZP 0% regime — you choose one, not both
Not eligibleConstituent member of a large multinational group (the Pillar Two population)
Not eligibleAny business that has exceeded AED 3M revenue in any period since 1 June 2023

Note the asymmetry in the last row: the AED 3M test is not annual. Breach it once and the relief is gone for that period and for good — you cannot drop back under the line next year and re-elect.

The AED 3M line, measured properly

Revenue, not profit, is what the test reads — gross income for the period under the accounting standards you already use, before any expenses. A business with AED 2.9M of revenue and thin margins is comfortably eligible; one with AED 3.1M of revenue and a loss is not. Because the line is drawn on revenue, a single large invoice near year-end can end eligibility for the entire period, so the number to watch is running twelve-month revenue, not the calendar-year figure in the accounts.

One trap sits underneath the arithmetic: you cannot split a business to stay small. Carving one operation into two licences purely to keep each under AED 3M is exactly the artificial separation the general anti-abuse rule is written to catch, and the FTA can look through it. The relief rewards genuinely small businesses, not small-looking ones.

The trade-offs nobody mentions

A period under relief does not build the assets a normal taxable period does. Tax losses cannot be carried forward out of a relief period, and disallowed net interest cannot be carried either. For a young company that expects to be loss-making now and profitable later, electing the relief in a loss year can quietly waste losses that would have sheltered future profit — sometimes the arithmetic says take the 9% computation, bank the loss, and skip the relief.

The second trade-off is the free zone one. A company that qualifies as a Qualifying Free Zone Person cannot also claim Small Business Relief for the same period; the two regimes are mutually exclusive. SBR is simpler and needs no de-minimis tracking, but it expires and blocks those carried-forward losses; QFZP is permanent but demands substance, audits and transfer-pricing discipline every year. The 0% guide walks the full comparison.

How to elect, and the deadline mechanics

The relief is not applied by default. It must be claimed in the corporate tax return for each period you want it, and you still have to register for corporate tax and file that return within nine months of the period end. A business that qualifies but forgets to elect pays 9% on everything above AED 375,000 as if the relief did not exist.

The expiry is fixed to the period-end date, not the filing date. The relief is available for financial periods ending on or before 31 December 2026. For a calendar-year company, that makes the year ending 31 December 2026 the last eligible period — the return itself is filed in 2027. After the window closes, unless the Ministry of Finance extends it, eligible businesses fall back to the standard 0% on the first AED 375,000 and 9% above.

What to do before the window closes

Three moves cover it. First, track trailing twelve-month revenue against the AED 3M line monthly, not once a year — the relief is lost on the day you cross, not the day you notice. Second, if you hold a free zone licence, settle the SBR-versus-QFZP question in writing before year-end, because you cannot claim both and the wrong default costs money either way. Third, keep proper books regardless: the relief still requires a filed return, and the day the window closes you will need accounts that prove your profit sits where you say it does.

The whole decision takes an afternoon with real numbers. Model your period in the corporate tax calculator, compare the relief against a plain 0%/9% computation, and — if you are loss-making or near the 3M line — check whether electing actually helps before you do it.

Frequently asked

What is Small Business Relief in the UAE?
It is a temporary corporate tax relief (Ministerial Decision No. 73 of 2023) that lets a resident business with revenue of AED 3,000,000 or less elect to be treated as having no taxable income for the period. The return is still filed, but the tax due is zero. It applies to financial periods ending on or before 31 December 2026.
Who is eligible for Small Business Relief?
Resident persons — UAE companies or individuals running a business — whose revenue stayed at or below AED 3M in the current period and every previous period since 1 June 2023. Constituent members of large multinational groups and free zone companies claiming the QFZP regime are excluded, however small their revenue.
Does Small Business Relief apply automatically?
No. It must be claimed in the corporate tax return for each eligible period, and you must still register for corporate tax and file on time. A business that qualifies but does not elect is taxed at 9% on profit above AED 375,000 as usual.
When does Small Business Relief end?
It applies to financial periods ending on or before 31 December 2026. For a calendar-year company, the year ending 31 December 2026 is the last eligible period, with the return filed in 2027. After that, unless the Ministry of Finance extends the measure, businesses return to the standard 0%/9% structure with the AED 375,000 threshold.
Can a free zone company claim Small Business Relief?
It can, but not at the same time as the QFZP 0% regime — the two are mutually exclusive for a given period. A free zone company under AED 3M revenue must choose: the simpler SBR through 2026, or QFZP status, which is permanent but requires substance, audited accounts and transfer-pricing compliance.
Does electing the relief mean I lose my tax losses?
For that period, yes. Tax losses and disallowed net interest arising in a period under Small Business Relief cannot be carried forward. For a loss-making start-up that expects future profit, it can be worth skipping the relief to preserve those losses against later taxable profit.

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