The UAE corporate tax regime recognises the need to support startups, entrepreneurs, and small businesses during their early growth stages. To ease the compliance and tax burden on smaller entities, the law introduces Small Business Relief (SBR) a key concession under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
For eligible businesses, Small Business Relief can significantly reduce tax exposure while simplifying compliance obligations.
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What Is Small Business Relief (SBR)?
Small Business Relief is a temporary corporate tax concession that allows eligible businesses to be treated as having no taxable income for a specific tax period, effectively resulting in a 0% corporate tax liability.
This relief is designed to:
- Support SMEs and startups
- Reduce administrative and compliance costs
- Encourage business formalisation and growth
Who Is Eligible for Small Business Relief?
A business may qualify for Small Business Relief if:
- It is a resident taxable person in the UAE
- Its annual revenue does not exceed AED 3 million and has not exceeded the limit in any of its previous financial years
- It elects to apply SBR in its corporate tax return
- It is not part of a multinational enterprise group
The relief is available for tax periods up to and including 31 December 2026, subject to meeting eligibility criteria.
Who Is Not Eligible?
Small Business Relief is not available to:
- Large multinational enterprises
- Companies with revenue exceeding AED 3 million
- Businesses that choose not to elect SBR
- Certain regulated or exempt entities as defined by the FTA
Benefits of Small Business Relief
Businesses that qualify for SBR can benefit from:
- 0% corporate tax liability for the relevant tax period
- Reduced compliance and administrative burden
- Improved cash flow during early business stages
- Greater flexibility for reinvestment and growth
However, while tax may not be payable, record-keeping and filing obligations still apply.
Compliance Requirements Under SBR
Even when claiming Small Business Relief, businesses must:
- Register for corporate tax with the Federal Tax Authority (FTA)
- File annual corporate tax returns
- Maintain proper accounting records
- Comply with anti-abuse rules
Misuse or incorrect claims may attract penalties and reassessment by the FTA.
Practical Example
A UAE-registered consultancy firm earns AED 1.8 million in annual revenue. Since its revenue is below the AED 3 million threshold, the company may elect Small Business Relief and will be treated as having no taxable income, resulting in no corporate tax payable for that period.
Key Takeaways for Small Businesses
- Small Business Relief offers temporary tax relief to eligible UAE businesses
- Revenue must not exceed AED 3 million
- Businesses must actively elect SBR
- Filing and record-keeping obligations remain mandatory
