What Is Small Business Relief (SBR)?
Small Business Relief is a temporary corporate tax incentive under Article 21 of Federal Decree-Law No. 47/2022 and Ministerial Decision No. 73/2023. It allows eligible UAE resident businesses to elect to be treated as having no taxable income for a tax period — meaning zero corporate tax payable.
SBR is designed to support startups, micro-businesses, and small enterprises by reducing their corporate tax burden and compliance costs during the early years of the UAE’s corporate tax regime.
| Feature | Detail |
|---|---|
| Revenue threshold | AED 3,000,000 (current period + ALL previous periods) |
| Tax rate if elected | 0% effective (taxable income treated as zero) |
| Available until | 31 December 2026 (tax periods ending on or before) |
| Legal basis | Article 21, Federal Decree-Law No. 47/2022; Ministerial Decision No. 73/2023 |
| How to claim | Elect on your corporate tax return each period (not automatic) |
| Still must register & file? | Yes — registration, return filing, and record-keeping remain mandatory |
Who Is Eligible for Small Business Relief?
You must meet ALL of the following conditions:
| Condition | Requirement |
|---|---|
| UAE Resident Person | Must be a resident juridical person (company) or natural person (sole proprietor/freelancer) |
| Revenue ≤ AED 3 million | In the current tax period AND all previous periods ending on or before 31 Dec 2026 |
| Not a QFZP | Qualifying Free Zone Persons are excluded (they have their own 0% regime) |
| Not an MNE Group member | Multinational Enterprise Groups with consolidated revenue > AED 3.15 billion are excluded |
| No artificial separation | Business must not be artificially split to stay under AED 3M (GAAR applies under Article 50) |
⚠️ The “All Previous Periods” Rule Is Critical
If your revenue exceeded AED 3 million in any previous tax period, you are permanently ineligible for SBR from that point forward — even if revenue drops below AED 3M again later. For example: revenue of AED 4.3M in 2025 means no SBR in 2026 even if 2026 revenue is only AED 1.9M.
How Revenue Is Calculated for SBR
Revenue for SBR purposes is determined using UAE-accepted accounting standards (IFRS or equivalent):
• All income must be included — even income that would normally be exempt from corporate tax (like domestic dividends)
• Juridical persons: Include all worldwide income (UAE + foreign)
• Natural persons: Include only business/professional activity income in the UAE (salary, personal investments, and real estate investment income are excluded)
• Multiple businesses? Revenue from ALL businesses must be combined to check the AED 3M threshold
• Revenue is the gross figure — not net profit. A business with AED 2.8M revenue and AED 2.5M expenses (AED 300K profit) qualifies. A business with AED 3.2M revenue and AED 3.5M expenses (net loss) does not qualify.
💬 Not Sure If You Qualify for SBR?
Send us your last 2 years’ revenue figures — we’ll confirm eligibility and file your return with SBR election for AED 249.
How to Elect Small Business Relief on Your Return
SBR is not automatic. You must actively elect it on your corporate tax return for each tax period. Here’s the process:
Step 1: Register for Corporate Tax
You must have a TRN before you can file. If not registered, follow our registration guide or let Fastlane register for AED 199.
Step 2: Prepare Your Financial Statements
SBR-eligible businesses can use the cash basis of accounting (revenue ≤ AED 3M). You still need financial records — but the simplified accounting requirement reduces compliance burden.
Step 3: File Your CT Return and Elect SBR
Log in to EmaraTax, file your corporate tax return, and tick the SBR election box. Your taxable income is treated as zero. No tax payment required. Download your filing acknowledgment.
Should You Elect SBR or Skip It? Decision Guide
Electing SBR saves tax now but has trade-offs. Here’s when to elect vs when to skip:
| Scenario | Elect SBR? | Why |
|---|---|---|
| Profitable, revenue under AED 3M, no significant loans | ✅ Yes | Zero tax. No downside. |
| Profitable, revenue under AED 3M, significant interest expenses | ⚠ Consider skipping | Under SBR you cannot carry forward disallowed interest. Skipping preserves interest deductions for future use. |
| Making losses, expecting future profits | ❌ Skip SBR | Under SBR you cannot carry forward tax losses. Filing without SBR lets you bank losses to offset future profits. |
| Startup with high setup costs, low revenue | ❌ Skip SBR | Preserve loss carry-forward for when you become profitable. |
| Revenue approaching AED 3M, might exceed next year | ✅ Yes for this year | Take the zero tax while you can. Once you exceed AED 3M, you’re permanently out. |
| QFZP with qualifying income | 🚫 Not eligible | QFZPs are excluded. Use the QFZP 0% regime instead. |
What SBR Does NOT Exempt You From
Even with SBR elected, you must still:
• Register for corporate tax and obtain a TRN
• File a corporate tax return every period (nil/SBR return)
• Maintain records for 7 years (revenue evidence, financial statements, invoices)
• Comply with the arm’s length principle for related-party transactions (although formal TP documentation is not required under SBR)
• Notify FTA of changes to your business details
Failure to register or file — even with SBR — triggers penalties: AED 10,000 for late registration, AED 500/month for late filing. See full penalties guide →
SBR Expiry: What Happens After 31 December 2026?
Small Business Relief is available only for tax periods ending on or before 31 December 2026. From 1 January 2027 onwards:
• All businesses will be subject to the standard 0% / 9% corporate tax rates regardless of revenue
• Businesses under AED 375,000 taxable income will still pay 0% (the universal exemption band)
• Businesses between AED 375,000 and AED 3M taxable income will pay 9% on the amount above AED 375,000
• Proper accounting, deduction planning, and timely filing become essential
Prepare now. If you have been relying on SBR, 2026 is the year to set up proper accounting processes for 2027 compliance. Fastlane monthly accounting from AED 499/month →
Worked Example: SBR vs No SBR Comparison
| Item | With SBR Elected | Without SBR |
|---|---|---|
| Revenue | AED 2,500,000 | AED 2,500,000 |
| Expenses | AED 2,100,000 | AED 2,100,000 |
| Net profit | AED 400,000 | AED 400,000 |
| Taxable income | AED 0 (SBR) | AED 400,000 |
| Tax @ 9% above AED 375K | AED 0 | AED 2,250 |
| Can carry forward losses? | ❌ No | ✅ Yes (75% of future income) |
| Can carry forward interest? | ❌ No | ✅ Yes (10 years) |
In this example: SBR saves AED 2,250 in tax. But if this business expected losses next year and future profits, skipping SBR to bank the loss carry-forward could save significantly more in future years.
Anti-Abuse: Artificial Separation of Business
The FTA watches for businesses that artificially split into multiple entities to keep each under AED 3M. Under Article 50 (General Anti-Abuse Rule), if the FTA determines that the separation was done primarily to qualify for SBR, it can combine revenues of all entities, deny the relief, and recover unpaid tax with penalties.
Example: A restaurant group splits into 3 separate LLCs (each under AED 3M) but all share the same kitchen, staff, and management — the FTA can treat this as one business with AED 9M revenue and deny SBR for all three.
⚠️ Last Chance: SBR Expires 31 December 2026
If your revenue is under AED 3 million, this is your last year to benefit from zero corporate tax. From 2027, you pay 9% on profits above AED 375,000. File your SBR return with Fastlane now →