Small Business Relief in the UAE: How to Elect and What You Give Up

Small Business Relief (SBR) is the most valuable relief available to UAE start-ups and owner-managed businesses, and also the most frequently mishandled. Some businesses qualify and forget to elect. Others elect when they should not, and give away tax losses worth more than the relief itself. This guide explains who qualifies, how the election works and when it pays to say no.

What is Small Business Relief?

SBR was introduced by Ministerial Decision No. 73 of 2023 under Article 21 of the Corporate Tax Law. An eligible business that elects for it is treated as having no taxable income for that tax period, so no corporate tax is payable. It still files a return — a simplified one — and still keeps proper records.

Originally, the relief applied to tax periods ending on or before 31 December 2026. In 2026 the Ministry of Finance extended it, through Ministerial Decision No. 131 of 2026, to tax periods ending on or before 31 December 2029. The AED 3 million revenue threshold is unchanged.

Who qualifies for Small Business Relief

• Resident person. UAE companies and resident individuals carrying on business.
• Revenue of AED 3 million or less in the current tax period and every previous tax period. Exceed it once and the relief is lost for later periods.
• Not a Qualifying Free Zone Person. QFZPs cannot elect SBR.
• Not a member of a large multinational group (consolidated group revenue above AED 3.15 billion).

The FTA can deny the relief where a business has been artificially split to keep each part below the threshold. If you run several licences in the same line of business, take advice before electing.

How to elect Small Business Relief

1. Register for corporate tax on time — late registration does not stop you electing, but it does attract a penalty.
2. Prepare financial statements for the period. Businesses with revenue below AED 3 million may prepare them on a cash basis.
3. In the corporate tax return on EmaraTax, confirm revenue and select the Small Business Relief election.
4. Keep the records that support your revenue figure. The FTA can review it.

The election is made period by period. You can elect in one year and not in the next, provided you remain eligible.

What you give up when you elect

• Loss carry-forward. Tax losses incurred in a period where SBR is elected cannot be carried forward to later years.
• Use of earlier losses. Losses brought forward from non-SBR years cannot be used in an SBR year (they remain available for later years).
• Interest and group reliefs. Net interest expenditure cannot be carried forward from SBR periods, and loss transfers within a group are not available for the period.

When Small Business Relief is the wrong choice

SBR is usually right for a profitable small business. It can be the wrong choice for:

• Loss-making start-ups that expect to cross AED 3 million soon. Electing SBR in the loss years throws away losses that could shelter future profits from 9% tax.
• Group companies where losses could be transferred to a profitable member.
• Businesses close to the threshold whose revenue will cross AED 3 million within the extension period — plan for the transition rather than assuming the relief continues.

A simple calculation comparing tax payable with and without the election, across the next three years, usually makes the decision obvious. Our Small Business Relief advisory service does exactly that and handles the election in your corporate tax return.

Frequently asked questions

Is Small Business Relief automatic?

No. You must elect it in the corporate tax return for each tax period.

Has Small Business Relief been extended?

Yes. Ministerial Decision No. 131 of 2026 extended the relief to tax periods ending on or before 31 December 2029, keeping the AED 3 million threshold.

Can a free zone company claim Small Business Relief?

A free zone company that is a Qualifying Free Zone Person cannot. A free zone company that is not a QFZP can, if it meets the other conditions. See free zone corporate tax.

Do I still need to register and file if I claim SBR?

Yes. Registration, a return and proper records are all still required.

What counts as revenue for the AED 3 million test?

Gross revenue recognised in the financial statements for the period, before deducting costs.

This article reflects the position as at October 2026 and is general guidance. Book a free consultation to check whether electing SBR is right for you.