With the introduction of corporate tax in the UAE, startups and small businesses began searching for ways to reduce their tax burden legally. To support entrepreneurs during this transition, the UAE government introduced Small Business Relief (SBR).
Small Business Relief in UAE allows eligible businesses to be treated as having zero taxable income, even if profits are generated.
However, this relief is not automatic and must be claimed correctly.
This guide explains everything business owners must know about Small Business Relief UAE in 2025–2026, including eligibility, conditions, examples, and compliance requirements.
What Is Small Business Relief in UAE?
Small Business Relief is a temporary corporate tax relief introduced under the UAE Corporate Tax Law.
When approved, the taxable income of an eligible business is treated as nil, meaning no 9 percent corporate tax is payable for that financial year.
Official reference:
https://mof.gov.ae/corporate-tax/
Validity Period of Small Business Relief
Small Business Relief is available until:
31 December 2026
The relief may be revised or discontinued after this period depending on government policy.
Who Is Eligible for Small Business Relief UAE?
To qualify, all of the following conditions must be met.
Revenue Limit of AED 3 Million
The business must generate annual revenue of AED 3 million or less.
Important note:
-
Revenue refers to total income, not profit
-
Exceeding the limit even slightly disqualifies the business
Resident Business Requirement
The business must be a UAE resident person, including:
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Mainland companies
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Free zone companies
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Sole establishments
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Professional license holders
Not Part of a Multinational Group
Businesses that belong to multinational groups with global revenue exceeding EUR 750 million are not eligible.
Proper Accounting Records
Businesses must maintain:
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Financial statements
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Books of accounts
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Supporting invoices
Records must be retained for 7 years, even if tax payable is zero.
Who Is Not Eligible for Small Business Relief?
Small Business Relief cannot be applied if:
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Revenue exceeds AED 3 million
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The business is a large enterprise
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The company is part of a multinational group
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Corporate tax returns are not filed
Small Business Relief for Free Zone Companies
Free zone companies may choose between:
Option 1: Qualifying Free Zone Person
Eligible for 0 percent tax on qualifying income.
Option 2: Small Business Relief
Available if revenue does not exceed AED 3 million.
Both benefits cannot be claimed together.
Small Business Relief vs Corporate Tax Rate
| Category | Corporate Tax |
|---|---|
| Profit up to AED 375,000 | 0 percent |
| Profit above AED 375,000 | 9 percent |
| Small Business Relief | 0 percent on full income |
Example of Small Business Relief Calculation
Example:
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Revenue: AED 2.4 million
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Net profit: AED 600,000
Without SBR:
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Corporate tax payable: AED 20,250
With SBR:
-
Corporate tax payable: 0
Is Corporate Tax Registration Mandatory?
Yes. All businesses must register with the Federal Tax Authority, even if Small Business Relief is claimed.
Failure to register results in an AED 10,000 penalty.
Official FTA portal:
https://tax.gov.ae/en/
Is Audit Required Under Small Business Relief?
Audit is not mandatory unless:
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Required by licensing authority
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Requested by bank
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Revenue threshold is exceeded
Financial statements remain compulsory.
Common Mistakes Businesses Make
Many businesses lose eligibility due to:
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Assuming relief is automatic
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Confusing revenue with profit
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Missing registration deadlines
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Poor bookkeeping
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Not filing tax returns
Relationship Between Small Business Relief and VAT
Small Business Relief applies only to corporate tax.
VAT obligations continue independently.
For VAT assistance:
Contact Orca & Co.
How to Claim Small Business Relief UAE
The process includes:
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Corporate tax registration
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Financial statement preparation
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Selection of Small Business Relief option
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Annual corporate tax return filing
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Retention of documentation
Incorrect claims may result in penalties.
How StratEdge Advisors Can Help
StratEdge Advisors supports businesses with:
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Corporate tax registration
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Small Business Relief eligibility review
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Tax calculation and planning
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Corporate tax return filing
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Ongoing compliance support
Explore services:
https://www.stratedge.ae/
Related Business Setup Services
-
Dubai Mainland Company Setup
https://www.stratedge.ae/dubai-mainland-company-setup/ -
Free Zone Company Setup in Dubai
https://www.stratedge.ae/freezone-company-setup/
Frequently Asked Questions
Is Small Business Relief automatic in UAE?
No. It must be claimed while filing the corporate tax return.
What is the revenue limit for Small Business Relief?
AED 3 million per financial year.
Is Small Business Relief available after 2026?
Currently valid until 31 December 2026.
Can freelancers apply for Small Business Relief?
Yes, if operating under a taxable professional license.
Does Small Business Relief remove filing obligations?
No. Corporate tax filing remains mandatory.