Small Business Relief under UAE Corporate Tax Law gives resident businesses with revenue up to AED 3 million a tax break. Firms elect this option to count as having zero taxable income, avoiding the 9% tax rate. This temporary program runs until December 31, 2026.
The UAE government created Small Business Relief to help smaller firms handle the new corporate tax system. Businesses qualify if they meet strict rules set by the Federal Tax Authority (FTA). This relief treats your firm as earning no taxable income during a tax period, which means no corporate tax bill.
Lawmakers passed Federal Decree-Law No. 47 of 2022 to launch UAE corporate tax at 9% on profits over AED 375,000. Yet, Small Business Relief steps in for those below the revenue threshold. You gain breathing room to grow without immediate tax hits.
Your business must fit these core requirements to claim Small Business Relief:
Freelancers qualify as natural persons if they hold a freelance permit and earn business income. Startups in mainland zones often fit too, but Free Zone firms claiming QFZP perks do not. If your firm joins a tax group, the group checks the threshold as one unit.
The program applies to tax periods starting June 1, 2023, or later, and ending by December 31, 2026. Exceed the limit once, and you lose eligibility forever in this window.
Firms elect Small Business Relief to cut costs and simplify operations. You pay zero corporate tax, freeing cash for investments or daily needs. Compliance eases up, so no need to figure taxable income adjustments or follow transfer pricing rules.
You skip limits on interest deductions while under relief, but cannot carry forward losses or unused interest to future years. This suits profitable small firms without big debts. For example, a Dubai-based consultant earning AED 2.5 million yearly saves about AED 202,500 in tax (9% on profits above AED 375,000, assuming 100% profit margin).
Unlike Free Zone 0% rates, which demand substance tests like local staff and spending, Small Business Relief requires less proof. It fills a gap for mainland businesses not in zones.
Electing relief blocks you from carrying forward tax losses or net interest expenses. If your business runs losses now but expects profits later, skip the election to use those losses against future taxes.
Free Zone firms should stick with QFZP status if they meet substance rules, as it offers ongoing 0% on qualifying income beyond 2026. Mainland firms with high interest costs might prefer standard rules to deduct expenses.
As of 2025, no changes hit the program, but watch FTA updates for any tweaks.
These cases show how relief aids growth while rules prevent abuse.
Include all business income per UAE accounting standards. Exclude exempt items like dividends if they fit other rules.
Yes, if they conduct a business activity and meet the revenue limit. Register and file as required.
You become ineligible from that tax period. Pay tax on income over AED 375,000 at 9%.
No mandatory audit, but keep records. FTA may request them during reviews.
Free Zones offer 0% on qualifying income indefinitely if conditions met. Relief is temporary and simpler for non-zone firms.
Mostafa is a seasoned Tax Consultant with over 5 years years of experience gained in diverse taxations matters. He has vast expertise in settling tax disputes with the Federal Tax Authority and handling of tax procedures in compliance with tax laws. He is adept in investigating underlying tax intricacies and offering expert tax advisory. He is also well-versed in conducting tax analysis’s and negotiations with the Tax Regulators, upon tax preparation and filing. Mostafa specializes in the areas of Tax law, Auditing, Accounting and Banking law.