Small Business Relief in UAE Corporate Tax: Who Qualifies and How to Claim
How the AED 3 million Small Business Relief works, who is excluded, what you give up by electing it and why the 2026 end date matters.
By Countify's ACCA/FCCA chartered certified accountants
What Small Business Relief does
Small Business Relief lets an eligible business be treated as having no taxable income for a tax period, so no corporate tax is payable. It also simplifies some compliance, for example removing the need to prepare transfer pricing documentation.
It is a relief you elect, not an exemption from the system. You must still register for corporate tax, keep records and file a return in which you make the election.
Who qualifies
- You must be a UAE resident person: a UAE company, or an individual carrying on business in the UAE.
- Revenue must be AED 3 million or less in the current tax period and in every previous tax period.
- The relief is available for tax periods starting on or after 1 June 2023 and ending on or before 31 December 2026.
- Qualifying free zone persons and members of large multinational groups (consolidated revenue of EUR 750 million or more) cannot elect it.
Revenue, not profit
The AED 3 million test uses gross revenue from your financial statements, not profit. A trading company with AED 3.2 million of sales and a small margin does not qualify, even if its profit is well below AED 375,000.
Splitting one business into several companies to stay under the threshold is treated as an artificial separation, and the FTA can deny the relief and apply penalties.
What you give up
Tax losses and disallowed net interest expenditure from periods in which you elect Small Business Relief cannot be carried forward. If you expect losses in a start-up year, it may be better not to elect the relief for that period so the losses can be used later.
Plan for the end of the relief
As the relief currently applies only to tax periods ending on or before 31 December 2026, small businesses should model what their tax position looks like from 2027 under the standard rules, where the first AED 375,000 of taxable income is taxed at 0% and the rest at 9%.
How Countify can help
We check eligibility each year, compare electing the relief with carrying losses forward, and file the return with the right election.
This guide is general information and reflects the rules at the time of writing. UAE tax rules change, so check the latest FTA guidance or speak to us before acting.
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