Rules as of 29 October 2026. Checked against Article 21 of Federal Decree-Law No. 47 of 2022, Ministerial Decision No. 73 of 2023 and Ministerial Decision No. 131 of 2026 (Ministry of Finance).
The short answer: Small Business Relief (SBR) lets a UAE resident business with revenue of AED 3 million or less be treated as having no taxable income, so it pays no corporate tax. Revenue must stay at or below AED 3 million in the current period and every earlier period. In July 2026 the Ministry of Finance extended it to tax periods ending on or before 31 December 2029. You must still register and file a return, and you choose the relief on each return.
Who can use Small Business Relief
| Condition | Rule |
|---|---|
| Residence | A resident person for corporate tax (a UAE company, or an individual doing business in the UAE) |
| Revenue | AED 3,000,000 or less in the current tax period and in every previous tax period |
| Tax periods | Starting on or after 1 June 2023 and ending on or before 31 December 2029 |
| Not allowed for | Qualifying Free Zone Persons, and companies in a multinational group with consolidated revenue of AED 3.15 billion or more |
One year above AED 3 million ends it for good: the decision says you can't elect SBR if revenue in any relevant or previous period exceeded the threshold.
How revenue is measured
Revenue is the gross amount under the accounting standards accepted in the UAE, not profit. A company with AED 2.9 million of sales and a loss still qualifies; a company with AED 3.2 million of sales and tiny profit does not. Businesses with revenue of AED 3 million or less may also keep their books on a cash basis (Ministerial Decision No. 114 of 2023).
What you give up when you elect it
- Tax losses from a year in which you use SBR can't be carried forward. Losses from earlier years without SBR can still be used in later years without SBR.
- Net interest expenditure from an SBR year can't be carried forward either.
So a start-up making losses in its first years may be better off not electing SBR, to keep those losses for later profitable years. We work this out with each client before every return.
Free Zone companies: SBR or the 0% regime?
A Qualifying Free Zone Person can't use SBR. A small Free Zone company therefore chooses between two paths:
- Qualifying Free Zone Person: 0% on qualifying income, but audited financial statements and other conditions every year.
- Not a QFZP, using SBR: treated as no taxable income while revenue stays at or below AED 3 million, without the QFZP conditions.
Which is better depends on your income, your growth and the cost of an audit. See corporate tax in the UAE and audited accounts.
Don't split a business to stay under AED 3 million
If the Federal Tax Authority finds that a business was artificially split into several companies to keep each under the threshold, and the total revenue is above AED 3 million, it treats this as an arrangement to get a tax advantage and can deny the relief.
What you still have to do
- Register for corporate tax on time (new companies within 3 months of incorporation; late registration is fined AED 10,000).
- Keep proper books and records for 7 years.
- File the corporate tax return within 9 months of your year end, electing SBR on it.
- Watch your revenue every month as you approach AED 3 million, and plan for VAT once sales pass AED 375,000.
Our accounting service covers all of this for small businesses.
Questions
What is Small Business Relief in the UAE?
A corporate tax relief that lets a resident business with revenue of AED 3 million or less, in the current and every previous tax period, be treated as having no taxable income.
Until when does Small Business Relief apply?
For tax periods ending on or before 31 December 2029, after Ministerial Decision No. 131 of 2026 extended the original 2026 end date.
Do I need to file a return if I use Small Business Relief?
Yes. You must register for corporate tax and file a return, choosing the relief on it.
Can a Free Zone company use Small Business Relief?
Only if it is not a Qualifying Free Zone Person. A QFZP can't elect it.
Can I carry forward losses if I use Small Business Relief?
No. Tax losses and net interest expenditure from a year in which you elect the relief can't be carried forward.
Is the AED 3 million revenue or profit?
Revenue: the gross amount under the accounting standards accepted in the UAE, not profit.
Sources
- Ministerial Decision No. 73 of 2023 on Small Business Relief (Ministry of Finance)
- Ministerial Decision No. 131 of 2026 extending it to 2029 (Ministry of Finance)
- Federal Tax Authority: Small Business Relief
- Ministerial Decision No. 114 of 2023 on accounting standards
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