Small Business Relief is one of the most practical features of the UAE Corporate Tax regime for entrepreneurs and smaller enterprises. It allows eligible businesses to be treated as if they have no taxable income for a given tax period, significantly reducing compliance obligations. However, the relief is temporary, subject to strict conditions, and not available to everyone. Below is a clear overview of the rules as they currently stand.
1. What Is Small Business Relief?
Under the UAE Corporate Tax regime, resident taxpayers may elect to apply Small Business Relief and be treated as having zero taxable income for the relevant period. When the relief applies, the business does not calculate its taxable income and does not apply deductions, tax losses, exempt income rules or other corporate tax reliefs. In short, it is a simplified regime intended for small to medium businesses.
2. Revenue Threshold
The main condition for Small Business Relief is that the business must have revenue below AED 3 million for:
- The current Tax Period, and
- All previous Tax Periods ending on or after 1 June 2023.
If revenue exceeds AED 3 million in any period, the relief is no longer available going forward.
3. Members of Multinational Groups
Businesses that are part of a Multinational Enterprise (MNE) Group with a total consolidated group revenue of AED 3.15 billion or more cannot apply Small Business Relief, regardless of their revenue. This ensures the relief is used only by small domestic businesses.
4. Qualifying Free Zone Persons
Likewise, Qualifying Free Zone Persons are also not permitted to use Small Business Relief. If an entity wishes to maintain QFZP status (typically to benefit from the 0% Free Zone tax rate on qualifying income), it cannot simultaneously elect Small Business Relief. A business must therefore decide which regime best meets its needs.
5. Temporary Relief
Small Business Relief applies only to Tax Periods that end on or before 31 December 2026. After that date, the relief is expected to cease to apply unless further extended by legislation.
Businesses that rely on the relief should therefore plan for the upcoming transition to normal corporate tax rules.
6. How Middle East Advisory Group can assist
Determining whether Small Business Relief is the right option, and whether your business meets the conditions, requires careful analysis of revenue, group structure, and Free Zone status. Our team can assess your eligibility, review your records for compliance, and guide you through the election process.
For tailored advice or assistance with UAE corporate tax filings, you can contact Middle East Advisory Group.