Small Business Relief for UAE corporate tax

What Small Business Relief is

Small Business Relief, or SBR, is an election in the UAE corporate tax return. A resident person whose revenue is AED 3 million or less in the relevant tax period and in all previous tax periods can choose to be treated as having no taxable income for that period. No corporate tax is payable.

The relief is not automatic. You must elect for it in the return, every period you want to use it. You also still need to be registered for corporate tax, and you still need to file a return on time.

SBR also reduces some compliance work, because you do not compute taxable income in the usual way for that period. You do still need proper accounts, because your revenue figure must be supported.

The extension to 31 December 2029

SBR was originally available for tax periods ending on or before 31 December 2026. In August 2026, Ministerial Decision No. 131 of 2026 extended it to tax periods ending on or before 31 December 2029.

For a business with a calendar financial year, this means the relief can now be claimed for 2027, 2028 and 2029, as well as earlier periods, provided you meet the conditions each year. For a business with a financial year ending 30 June, the last period covered is the one ending 30 June 2029, because the next one ends in 2030.

If you planned your finances on the basis that SBR ended in 2026, review that plan now. The extension gives small businesses three more years of relief, but it also means three more years in which the revenue test must be met.

Who cannot use SBR

SBR is not available to Qualifying Free Zone Persons. A free zone company that wants 0% on qualifying income uses the free zone regime instead and cannot combine the two.

It is also not available to members of multinational enterprise groups, meaning groups with consolidated revenue of EUR 750 million or more. A small UAE subsidiary of a large foreign group cannot claim it, however small the UAE business is.

The revenue test looks at all previous tax periods. Once your revenue exceeds AED 3 million in any tax period, you lose access to SBR for that period and every later period, even if revenue falls again. There are also anti-abuse rules against splitting one business into several entities to stay under the limit.

Revenue, not profit

The AED 3 million test is based on revenue, not profit. A business with AED 3.2 million of sales and a loss does not qualify. A business with AED 2.8 million of sales and a large profit does.

Revenue is the gross income in your financial statements for the period. Because the test is so sharp at AED 3 million, revenue recognition matters. Invoices raised in the wrong period, or income booked net instead of gross, can push you over or under the line. We check this before you elect.

If your business is growing, plan ahead. A year with AED 3.1 million of revenue ends SBR permanently, so it is worth knowing during the year, not after it, how close you are. With monthly bookkeeping in place, we can tell you each quarter where your revenue stands against the limit.

When electing may not be the best choice

SBR has trade-offs. Tax losses incurred in a period where you elect SBR cannot be carried forward to later periods. Losses brought forward from earlier periods also cannot be used while you are claiming the relief.

For a profitable business, SBR is usually the right choice. For a business making losses, especially one expecting to grow beyond AED 3 million, not electing may preserve losses that reduce tax later. We model both options so you can make an informed decision each year. The choice is made return by return, so a decision that suits you this year can be revisited next year, as long as you still meet the conditions.