Introduction

From June 1, 2023, the UAE introduced its first federal Corporate Tax regime. Seeking to support micro and small businesses, the Ministerial Decision No. 73 of 2023 introduced the Small Business Relief (SBR). Under this initiative, qualifying UAE resident persons are treated as not having derived any taxable income, effectively eliminating corporate tax if they meet revenue thresholds and other conditions 

This in‑depth guide explores everything about Small Business Relief UAE: who qualifies, who doesn’t, key benefits and trade‑offs, and how to elect. It’s designed to be your SEO‑optimized source on this topic.

1. What Is Small Business Relief in UAE Corporate Tax?

The Small Business Relief is a strategic corporate tax exemption scheme established under Article 21 of the UAE Corporate Tax Law, and further detailed in Ministerial Decision No. 73 of 2023 by the UAE Ministry of Finance. This relief aims to ease the transition for resident taxable persons whether natural persons (individual entrepreneurs) or juridical persons (companies and entities) by allowing them to be treated as having no taxable income during a given tax period, provided they meet specific revenue thresholds.

Introduced as part of the UAE’s broader efforts to support the local business environment, the Small Business Relief UAE scheme allows eligible businesses with annual revenue equal to or below AED 3 million to claim full exemption from corporate tax. This means that qualifying small businesses do not need to calculate, file, or pay UAE corporate tax for the applicable periods, significantly reducing compliance costs and administrative obligations.

By temporarily shielding small enterprises from the full extent of corporate tax liabilities, the Small Business Relief plays a crucial role in encouraging entrepreneurship, strengthening cash flow, and enabling reinvestment during the foundational years of business development. Importantly, the scheme applies to tax periods starting from 1 June 2023 and extends through 2026, allowing eligible taxable persons ample time to benefit from this impactful policy.

While the Small Business Relief UAE offers compelling advantages in terms of corporate tax exemption, it is essential to understand its conditions and limitations. Businesses that elect for this relief cannot claim other tax deductions, carry forward losses, or utilize transfer pricing exemptions. Therefore, it is critical for UAE small businesses to evaluate their tax position carefully before making the election.

For startups, micro-enterprises, and small businesses operating within the UAE, the Small Business Relief under the UAE Corporate Tax Law can serve as a vital tax planning strategy ensuring legal compliance, lowering tax exposure, and fostering early growth with financial confidence.

2. Who Can Elect for Small Business Relief UAE

Eligible applicants include only Resident Persons, defined as:

• Natural persons conducting business in the UAE (sole proprietors, freelancers)
• Juridical persons incorporated or managed in the UAE.

SBR must be elected for each tax period it is not automatic even if eligibility continues FTA UAE.

3. Eligibility Conditions

To qualify for Small Business Relief UAE, businesses must meet all of the following:

3.1 Annual Revenue Threshold

• Revenue must not exceed AED 3,000,000 in the relevant Tax Period and all previous Tax Periods.
• Threshold applies for tax periods starting on or after 1 June 2023 and ending no later than 31 December 2026.

3.2 UAE Residency

• Business must qualify as a UAE resident taxable person non‑residents generally don’t qualify.

3.3 Annual Election

• Relief must be formally elected on the corporate tax return in each tax period.

4. Who Cannot Elect for Small Business Relief?

Certain categories are specifically excluded:

• Qualifying Free Zone Persons, who already enjoy a 0% rate on qualifying income.
• Members of Multinational Enterprise (MNE) Groups with consolidated global revenue exceeding AED 3.15 billion.

If revenue thresholds are artificially managed (e.g. splitting entities), the FTA may invoke the General Anti‑Abuse Rule (GAAR) and disqualify the relief.

5. Benefits of Small Business Relief

Zero Corporate Tax Liability

• Businesses are treated as having no taxable income, yielding 0% corporate tax for that period.

Simplified Compliance

• No requirement to calculate taxable income, nor maintain transfer pricing documentation (though arm’s length principle still applies).

Administrative Efficiency

• The election brings simplified tax return filing, reduced documentation and lower professional fees.

Enhanced Cash Flow & Cost Savings

• Retaining earnings for reinvestment; avoids professional compliance costs.

6. Limitations & Considerations

• No Carry‑forward of Tax Losses or Disallowed Interest during relief periods.
• Cannot claim other deductions or reliefs (e.g. interest expenses) for that tax period.
• FTA may verify revenue and prohibit artificial structuring under GAAR.

7. Step‑by‑Step: How to Elect Small Business Relief

Step 1: Review Financials

Ensure that revenue is below AED 3,000,000 for the current and all previous periods.

Step 2: Decide Elect or Not

If loss-making or expecting to carry forward losses, consider not electing SBR to preserve future tax benefits Gulf News.

Step 3: File via EmaraTax

• Log into EmaraTax
• Under your entity’s Corporate Tax return, select the Small Business Relief election for that tax period.

Step 4: Confirm and Submit

Submit your return. Once elected, you cannot revoke SBR for that period.

Step 5: Retain Records

Keep financial statements, revenue documentation, and evidence of eligibility for at least five years,

8. With SBR vs Without SBR

Feature	With Small Business Relief	Without Relief (Standard CT regime)
Corporate Tax Liability	0%	Up to 9% on taxable income > AED 375,000
Transfer Pricing Documentation	Not required (arm’s length must still apply)	Required if intercompany transactions
Loss Carry‑forward / Net Interest	Disallowed during relief year	Permitted under standard rules
Filing Complexity	Simplified tax return only	Full corporate tax return required
GAAR Risk	Eligible if genuine small business	FTA may audit structure

9. Related Reading to Strengthen Your Corporate Tax Knowledge

For a deeper understanding of UAE’s evolving corporate tax landscape and to stay fully compliant in 2025, we recommend exploring these essential resources from Ample Inc.:

• [Corporate Tax UAE REIT Update: An Essential & Promising Guide for 2025] – Learn how real estate investment trusts are treated under the new tax regime and what strategic investors need to know.
• [Missed Corporate Tax Deadline 2025? Don’t Panic – FTA Offers Grace Period with No Fines (Act Fast!)] – If you missed a filing deadline, discover how the FTA’s relief measures can help you avoid penalties and get back on track.
• [How to Register for Corporate Tax in UAE – A Complete 2025 Guide] – Step-by-step instructions to register your business correctly through EmaraTax and avoid common compliance pitfalls.

These guides complement your knowledge on UAE’s tax system with confidence.

10. Best Practices & Pro Tip

1. Review profit/loss dynamics before electing SBR: loss-making SMEs may benefit more by preserving loss carry forwards.
2. Maintain impeccable revenue tracking to withstand FTA scrutiny.
3. Avoid splitting business entities just to meet the AED 3M threshold—GAAR may disqualify the election.
4. Track tax law updates – SBR applies only through 31 December 2026 unless extended.
5. Engage tax professionals for periodic health checks and election strategies.

11. Conclusion

The Small Business Relief UAE is a powerful provision under the UAE’s corporate tax regime, specifically designed to support small businesses and startups. For eligible UAE small businesses, this relief can lead to significant tax savings, simplified compliance, and improved financial stability during the critical early years of the corporate tax implementation period (2023–2026).

By meeting the clear eligibility criteria—such as maintaining revenue under AED 3 million and electing for the relief on time—taxable persons can be treated as having no taxable income for the relevant tax period. This can reduce administrative burden, especially for businesses with limited resources.

However, while Small Business Relief UAE is beneficial, it comes with limitations. Loss-making businesses or those expecting to carry forward tax losses should evaluate whether electing for the relief is the best strategic decision. Since claiming the relief excludes other corporate tax deductions, exemptions, or carry-forward benefits, a long-term tax strategy should be considered.

If you are a UAE-based small business navigating the complexities of corporate tax in 2025, ensure that your Small Business Relief election is accurate, timely, and well-documented. For expert support, consider working with a registered tax advisor—or explore our comprehensive guides below to stay informed, compliant, and ahead of deadlines.