Small Business Relief (UAE Corporate Tax): What is it? Are you eligible?
The short answer Small Business Relief lets a UAE business with revenue of AED 3 million or less pay zero Corporate Tax for the year. The law treats you as if you earned no taxable income at all. It came in with Ministerial Decision No. 73 of 2023 and was set to end in 2026.
The short answer
Small Business Relief lets a UAE business with revenue of AED 3 million or less pay zero Corporate Tax for the year. The law treats you as if you earned no taxable income at all. It came in with Ministerial Decision No. 73 of 2023 and was set to end in 2026. On 29 July 2026 the Ministry of Finance issued Ministerial Decision No. 131 of 2026 and moved the end date to 31 December 2029. The AED 3 million limit did not change. You still register. You still file a return. The relief is a box you tick inside that return. Nothing happens on its own.
Small Business Relief in UAE Corporate Tax
At a glance
| Question | Answer |
|---|---|
| What is it? | A rule that lets a small UAE business be treated as having no taxable income, so it pays AED 0 Corporate Tax |
| Who can claim it? | UAE Resident Persons — companies, and individuals running a business |
| What is the limit? | Revenue of AED 3,000,000 or less, this year and in every earlier year |
| Revenue or profit? | Revenue. All money coming in, before costs |
| Who cannot claim it? | Qualifying Free Zone Persons, and members of groups earning over AED 3.15 billion worldwide |
| Is it automatic? | No. You elect it inside your Corporate Tax Return, every year |
| Do I still register? | Yes, always |
| Do I still file? | Yes — a simplified return, within 9 months of your year-end |
| How long does it last? | Tax periods ending on or before 31 December 2029 |
| What is the law? | Article 21 of Federal Decree-Law No. 47 of 2022; Ministerial Decision No. 73 of 2023; extended by Ministerial Decision No. 131 of 2026 |
| What does it cost you? | You cannot carry forward that year’s tax loss or unused interest costs |
| Where do you claim it? | EmaraTax, inside the Corporate Tax Return |
What is Small Business Relief?
The UAE started charging 9% Corporate Tax in June 2023. This is the rule that keeps the smallest businesses out of that bill.
Here is how the law words it. A business that meets the conditions can choose to be treated as having no taxable income for the year. Not exempt. Not taxed at 0%. The law says there is nothing there to tax.
That wording has a knock-on effect. Because there is no taxable income, other reliefs and deductions have nothing to attach to. We come back to that later, because it is the one real cost of claiming Small Business Relief.
Revenue or profit? The number that decides it
This is where most businesses go wrong, so it is worth two minutes.
| Term | What it means | Example |
|---|---|---|
| Revenue | All the money your business brings in, before you take out any costs. Your top line. | You sell AED 2.6M of goods. Revenue = AED 2.6M. |
| Taxable income | What is left after allowed costs. Close to your profit. | Costs were AED 1.7M. Taxable income = AED 900,000. |
The AED 3 million test looks at revenue. A business can make very little profit and still be over the limit.
Look at two businesses in the same year.
| Revenue | AED 2,400,000 | AED 9,500,000 |
|---|---|---|
| Costs | AED 1,500,000 | AED 9,300,000 |
| Profit | AED 900,000 | AED 200,000 |
| Can claim the relief? | Yes — revenue is under AED 3M | No — revenue is well over AED 3M |
Business B makes less profit but files the full return, tracks losses, and may need transfer pricing files. High turnover with small margins — trading, distribution, contracting, travel — is the pattern that gets caught.
Small Business Relief extended to 2029: what changed in 2026
Until July 2026, the relief was going to stop after the tax year ending 31 December 2026.
Ministerial Decision No. 131 of 2026 changed that. The relief now runs to tax periods ending on or before 31 December 2029.
Nothing else moved. Same AED 3 million limit, same conditions, same way of claiming. You get three more years.
Who qualifies for Small Business Relief?
Four questions. Answer them in order. One “no” and you are out.
1. Are you a UAE Resident Person?
You are, if you are:
- A company set up in the UAE — a mainland LLC, a private shareholding company, or a free zone company.
- A foreign company that is actually run from the UAE.
- An individual running a business here — a freelancer, consultant or sole establishment owner — earning more than AED 1 million a year from that business. Below AED 1 million, Corporate Tax does not reach you at all.
Non-residents cannot claim it. That includes a foreign company with a branch in the UAE.
2. Is your revenue AED 3 million or less — this year and every year before?
Read that again. The limit has to hold in the current year and in every earlier tax year since Corporate Tax began.
Go over once and it is gone for good
Pass AED 3 million in any year and you lose the relief permanently, even if revenue falls back later. The FTA gives this example. A Sharjah business earned AED 4.3 million in 2025 and AED 1.9 million in 2026. It cannot claim the relief in 2026, because it broke the limit in an earlier year.
3. Are you outside the two blocked groups?
Two types of business are shut out no matter how small they are. The next section covers them.
4. Did you actually tick the box?
Nothing happens by itself. You select the relief inside your Corporate Tax Return, for that year, before the deadline. Miss it and the normal rules apply: 0% on the first AED 375,000 of taxable income, 9% above that.
Who is not eligible for Small Business Relief?
| Blocked group | Who this means | Why |
|---|---|---|
| Qualifying Free Zone Persons | A free zone company that meets all the conditions for the special 0% free zone rate | They already pay 0% on qualifying income. They do not need this as well. |
| Members of large multinational groups | Part of a group that works in more than one country and earns more than AED 3.15 billion worldwide | The relief is for genuinely small businesses, not small arms of very large groups. |
| Non-Resident Persons | A foreign company taxed here through a branch or other UAE presence | Only Resident Persons can claim it. |
Free zone companies: read this twice
Being in a free zone does not block you. Only a Qualifying Free Zone Person is blocked. Maybe your free zone company does not meet those qualifying conditions. Maybe it chooses not to claim that status. Either way, you can elect the relief, as long as revenue is AED 3 million or less. For a lot of small free zone companies this is the easier road. No qualifying-income calculations. No transfer pricing files.
What Small Business Relief is worth
| Taxable income | Tax without the relief | Tax with the relief | You save |
|---|---|---|---|
| AED 300,000 | AED 0 | AED 0 | AED 0 |
| AED 500,000 | AED 11,250 | AED 0 | AED 11,250 |
| AED 750,000 | AED 33,750 | AED 0 | AED 33,750 |
| AED 1,000,000 | AED 56,250 | AED 0 | AED 56,250 |
| AED 1,500,000 | AED 101,250 | AED 0 | AED 101,250 |
| AED 2,000,000 | AED 146,250 | AED 0 | AED 146,250 |
Normal rates: 0% on the first AED 375,000 of taxable income, then 9%. A business with AED 2.9M revenue and healthy margins can reach AED 2M profit and still sit inside the relief.
For a small business the saved paperwork often matters as much as the saved cash.
| What you have to do | With the relief | Without it |
|---|---|---|
| Register for Corporate Tax | Yes | Yes |
| File a return | Yes — simplified | Yes — full return with schedules |
| Work out taxable income | No | Yes |
| Transfer pricing documents | No | Yes, if thresholds are met |
| Fair pricing with related parties | Still required | Still required |
| Accounting method | Cash basis allowed | Accrual basis |
| Keep records | 7 years | 7 years |
What you give up when you claim it
Because the law treats you as having no income that year, a few things you might want to save for later simply disappear.
| Item | What happens |
|---|---|
| A loss made in that year | Gone. You cannot carry it forward. |
| Losses from earlier years when you did not claim the relief | Safe. You can still use them in a future year when you do not claim it. |
| Interest costs you could not deduct that year | Gone. Cannot be carried forward. |
| Participation and foreign branch exemptions | Not available that year |
| Group relief and restructuring relief | Not available that year |
| Credit for foreign tax paid | Not available that year |
When you should skip the relief on purpose
If you made a loss this year, claiming the relief gains you nothing. Your tax was already going to be zero. And it destroys the loss. A start-up that loses AED 800,000 in its first year is usually better off filing normally and keeping that loss. In a later profitable year, the loss can cover up to 75% of taxable income. Claim the relief in the good years instead.
How to claim Small Business Relief in EmaraTax
- Register on EmaraTax. Every business must register and get a Corporate Tax registration number, even when the tax will be zero.
- Close your books and find your revenue. Add up all income for the year. If revenue is AED 3 million or less you can use the cash basis, which counts money when it actually moves. That is simpler for most owners.
- Check your earlier years. Go back over every year since Corporate Tax started. One year above AED 3 million and you are out for good.
- File the return and tick the election. Open your Corporate Tax Return in EmaraTax. When it asks about the relief, choose Yes. The system checks your revenue, sets taxable income and tax to zero, and gives you the simplified return.
- Submit on time and keep your paperwork. The return is due within 9 months of your year-end. Keep your records for 7 years.
You cannot claim it late
The election lives inside the return. File late, or file without ticking it, and you cannot go back and claim it for that year. This is how eligible businesses end up with a real tax bill.
Records you need for Small Business Relief
You are not asked to send documents with the election. You are asked to be able to prove your revenue if the FTA comes back to you, for up to seven years.
| Record | What it proves |
|---|---|
| Financial statements for the year | Your revenue figure, prepared under accepted accounting standards |
| Sales invoices and contracts | Where the revenue came from, and that nothing is missing |
| Bank statements | That the money matches the books, which matters on the cash basis |
| Purchase invoices and expense records | Needed if you ever have to file normally, or if a year is reviewed |
| Revenue figures for every earlier year | That you never went over AED 3 million before |
| Related-party agreements and pricing | That deals with connected businesses were at fair market prices |
You skip transfer pricing documents here. You do not skip fair pricing itself.
Small Business Relief deadlines and fines
| Your year ends | Return and election due by |
|---|---|
| 31 December 2025 | 30 September 2026 |
| 31 March 2026 | 31 December 2026 |
| 30 June 2026 | 31 March 2027 |
| 31 December 2026 | 30 September 2027 |
| 31 December 2029 last year you can claim | 30 September 2030 |
| What you got wrong | Fine |
|---|---|
| Registered late | AED 10,000 |
| Filed the return late | AED 500 a month for the first 12 months, then AED 1,000 a month |
| Did not keep records | AED 10,000, or AED 20,000 if it happens again |
| Did not give records in Arabic when asked | AED 5,000 |
Set out in Cabinet Decision No. 75 of 2023 and its amendments. One day late counts as a full month. A zero-tax business that files 13 months late still owes AED 7,000.
Small Business Relief for freelancers, free zones and tax groups
Freelancers and individuals
If you run a business as an individual, Corporate Tax only reaches you once your business turnover passes AED 1 million in a calendar year. Salary from a job, personal investment income and personal property income sit outside Corporate Tax completely, whatever the amount.
| Business turnover in a year | What applies |
|---|---|
| Up to AED 1,000,000 | Corporate Tax does not apply. No registration needed for this activity. |
| AED 1,000,001 to AED 3,000,000 | Corporate Tax applies, but you can claim the relief → AED 0 tax |
| Above AED 3,000,000 | Full rules: 0% on the first AED 375,000 of taxable income, 9% above |
Free zone companies
You choose one road or the other. A Qualifying Free Zone Person gets 0% on qualifying income but has to meet a long list of conditions and keep the paperwork behind them. The relief gets you to the same AED 0 with far less work — but only while revenue stays under AED 3 million, and only until 2029. If you are small now and growing fast, work out which one you will still be using in three years.
Tax groups
A Tax Group counts as one business. So the AED 3 million test looks at the combined revenue of the whole group, not each company on its own. Grouping several small companies can push you over the line. Check the numbers before you form one.
Splitting a business in two
This is specifically blocked
Ministerial Decision No. 73 of 2023 deals with it directly. Split a business artificially, and if the parts together earn more than AED 3 million, the FTA can treat the split as a scheme to gain a tax advantage. That falls under the general anti-abuse rule. A second licence that halves one trading operation is exactly what the rule was written for.
Eight things people get wrong
| What people think | What is true |
|---|---|
| “Under AED 3 million, so I do not need to register.” | Every business registers. Registering late costs AED 10,000. |
| “No tax, so no return.” | You file within 9 months. The election sits inside that return. |
| “AED 3 million is a tax-free allowance.” | It is an eligibility limit. The tax-free amount under normal rules is AED 375,000 of taxable income. |
| “It is based on profit.” | It is based on revenue. |
| “Claim it once and I am covered for years.” | You claim it again every single year. |
| “Free zone companies cannot use it.” | Only Qualifying Free Zone Persons are blocked. Others can claim it. |
| “If revenue drops back under AED 3M, I qualify again.” | No. Once you cross the line it is permanent. |
| “Claiming it is always the smart move.” | Not in a loss year. You would throw the loss away. |
Your checklist for 2026 to 2030
- Know your crossing point. Track the month your revenue would hit AED 3 million. Crossing it in December costs you the whole year, and every year after.
- Think before claiming in a loss year. Run the numbers. Keeping the loss is often worth more.
- Keep clean revenue records from day one. You have to be able to prove the figure for seven years.
- Free zone company? Compare the two routes. You cannot use both.
- Put the 9-month deadline in your calendar and make the election part of your filing checklist, not an afterthought.
- Plan for 2030. Unless it is extended again, the last year you can claim Small Business Relief ends 31 December 2029. Build your accounting for the 9% rate now.
Small Business Relief FAQs
FAQs
What is Small Business Relief in the UAE?
It is a Corporate Tax rule that lets a UAE resident business with revenue of AED 3 million or less be treated as having no taxable income for the year. The result is AED 0 Corporate Tax and a simplified tax return.
Who is eligible for Small Business Relief?
UAE Resident Persons, both companies and individuals running a business, whose revenue is AED 3 million or less in the current year and in every earlier tax year. Qualifying Free Zone Persons and members of groups earning over AED 3.15 billion worldwide cannot claim it.
Is Small Business Relief automatic?
No. You tick the election inside your Corporate Tax Return each year. If you do not, normal rules apply for that year, and you cannot claim it later.
Do I still need to register for Corporate Tax if my revenue is under AED 3 million?
Yes. Registration is compulsory for every business, whatever your revenue or expected tax. Registering late costs AED 10,000.
Do I still file a tax return if I claim the relief?
Yes, but a simplified one. The Federal Tax Authority has confirmed that eligible businesses must submit simplified Corporate Tax Returns within the legal deadline, which is nine months after the year-end.
Is the AED 3 million limit based on revenue or profit?
Revenue. It is the total income your business brings in during the year, before costs are taken out.
What happens if I go over AED 3 million in one year?
You lose the relief for that year and permanently afterwards. The limit has to be met in the current year and in every earlier year. So revenue dropping back below AED 3 million does not bring it back.
Can free zone companies claim Small Business Relief?
A Qualifying Free Zone Person cannot, because it already gets 0% on qualifying income. A free zone company that is not a Qualifying Free Zone Person can claim it, if revenue is AED 3 million or less and the other conditions are met.
Has Small Business Relief been extended beyond 2026?
Yes. Ministerial Decision No. 131 of 2026, issued on 29 July 2026, extends it to tax periods ending on or before 31 December 2029. The AED 3 million limit from Ministerial Decision No. 73 of 2023 is unchanged.
How do I apply for Small Business Relief on EmaraTax?
Register for Corporate Tax, then open your Corporate Tax Return in EmaraTax for the year. When the return asks about the relief, select Yes. The portal checks your declared revenue, then sets your taxable income and tax to zero and switches you to the simplified return.
What documents do I need for Small Business Relief?
Nothing is uploaded with the election, but you must keep records for seven years: financial statements, sales invoices, contracts, bank statements, expense records, and revenue figures for every earlier year.
Can I carry forward a loss from a relief year?
No. Losses and unused interest costs from a year in which you claim the relief cannot be carried forward. Losses from earlier years when you did not claim it are safe and can be used in a future year when you do not claim it.
Can freelancers claim Small Business Relief?
Yes. A UAE resident individual whose business turnover is above AED 1 million but not more than AED 3 million can claim it, if the other conditions are met. Below AED 1 million, Corporate Tax does not apply at all.
Does the relief affect VAT?
No. VAT is a separate tax with its own registration threshold of AED 375,000 in taxable supplies. If you are VAT registered, you keep filing VAT returns as normal.
Can I split my company in two to stay under AED 3 million?
No. If a business is split artificially and the parts together earn more than AED 3 million, the FTA can treat it as a scheme to gain a tax advantage under the general anti-abuse rule.
How does the AED 3 million limit work for a tax group?
A Tax Group is treated as one business, so the limit applies to the group’s combined revenue rather than to each company separately.
Sources
- Federal Tax Authority — Small Business Relief
- Federal Tax Authority — Ministerial Decision No. 73 of 2023
- Federal Tax Authority — Small Business Relief Corporate Tax Guide (CTGSBR1)
- Federal Tax Authority — Simplified Corporate Tax Returns for eligible businesses
- Ministry of Finance — Small Business Relief extended to 31 December 2029
- Ministry of Finance — The original 2023 decision
- Cabinet Decision No. 49 of 2023 — individuals and the AED 1 million turnover rule
- Cabinet Decision No. 75 of 2023 (as amended) — penalties
Disclaimer: This is general information on UAE Corporate Tax, correct as at September 2026. It is not tax or legal advice. Rules and deadlines change. Check your own position with the Federal Tax Authority or a registered UAE tax agent before you file.
