Small Business Relief under UAE Corporate Tax: Eligibility, Conditions & Key Points

The UAE Corporate Tax regime offers Small Business Relief (SBR) to support eligible small businesses by reducing their Corporate Tax burden. This relief allows qualifying businesses to be treated as having no taxable income for Corporate Tax purposes, subject to conditions prescribed by the Federal Tax Authority (FTA).

What Is Small Business Relief?

Small Business Relief is a simplification measure under UAE Corporate Tax law that enables eligible businesses to apply a 0% Corporate Tax rate, provided all eligibility conditions are met.
When Small Business Relief is applied:
– The business is deemed to have no taxable income
– No Corporate Tax is payable for the relevant tax period

Who Is Eligible for Small Business Relief?

A business may qualify if:
– It is a UAE resident taxable person
– Its revenue does not exceed AED 3 million in the relevant tax period
– It elects to apply Small Business Relief in its Corporate Tax return

Not Eligible:
– Qualifying Free Zone Persons
– Members of a multinational enterprise group

Period of Applicability

Small Business Relief is available for tax periods starting on or after 1 June 2023 and will apply until 31 December 2026, subject to meeting eligibility conditions for each tax period.

Key Conditions to Apply Small Business Relief
To benefit from the relief:
– Revenue must not exceed AED 3 million
– Proper accounting records must be maintained
– Election must be made in the Corporate Tax return
– Relief must be assessed separately for each tax period

If revenue exceeds AED 3 million in any tax period, the business will not be eligible for Small Business Relief for that period or subsequent periods.

Compliance Obligations Despite Relief
Even if Small Business Relief is applied:
– Corporate Tax registration remains mandatory
– Corporate Tax return filing remains mandatory
– Financial records must be maintained
– Other Corporate Tax compliance requirements continue to apply

Why Small Business Relief Is Important

Small Business Relief reduces Corporate Tax liability to nil, simplifies compliance, and supports cash flow for small and growing businesses. Incorrect application or ineligibility may result in penalties or reassessment by the FTA.

How We Can Help

We assist businesses in assessing eligibility for Small Business Relief, Corporate Tax registration, return filing, and ongoing compliance to ensure full adherence to UAE Corporate Tax regulations.