Small Business Relief UAE: New Rules, Check Eligibility & AED 3M Threshold

Small Business Relief (SBR) is a Corporate Tax relief available to eligible Resident Persons in the UAE. It can allow a qualifying business to be treated as having not derived Taxable Income for a Tax Period, subject to the conditions under the UAE Corporate Tax rules.

One of the key eligibility requirements is the AED 3 million Revenue threshold. However, having Revenue of AED 3 million or less does not automatically qualify a business for Small Business Relief. The Revenue threshold must be met for the current and all previous relevant Tax Periods, and the business must also satisfy the applicable eligibility conditions and make the required election. 

There is also an important 2026 update. The UAE Ministry of Finance has extended Small Business Relief to Tax Periods ending on or before 31 December 2029, while continuing the AED 3 million threshold.

This guide explains the new rules, who can claim Small Business Relief, how to check eligibility, how the AED 3 million threshold works and what businesses need to do to claim the relief.

2026 Update: Small Business Relief is available for eligible businesses for Tax Periods ending on or before 31 December 2029, subject to the applicable conditions. The AED 3 million Revenue threshold continues to apply.

What is Small Business Relief in the UAE?

Small Business Relief is designed to reduce the Corporate Tax burden and compliance requirements for eligible small businesses and start-ups.

Where an eligible Resident Person elects for the relief, the business is treated as having not derived any Taxable Income for that Tax Period. This is different from simply applying the standard 0% Corporate Tax rate to Taxable Income up to AED 375,000. Small Business Relief is also not automatic. An eligible business must elect for the relief for the relevant Tax Period through its Corporate Tax return.

The relief therefore involves two separate questions:

1. Does the business meet the eligibility conditions?

2. Has the business elected for Small Business Relief in the relevant Tax Return?

What Are the New Small Business Relief Rules for 2026?

The key 2026 update is the extension of the period during which eligible businesses can claim Small Business Relief. Under Ministerial Decision No. 131 of 2026, the UAE extended the relief to Tax Periods ending on or before 31 December 2029. The AED 3 million Revenue threshold continues to apply. 

The AED 3 million cap limit set for Small Business Relief has continued to exist. Thus, eligible companies can continue to benefit from the Small Business Relief up until the year 2029.

Key Small Business Relief rules

The 2026 extension does not make the relief automatic. Businesses still need to assess their eligibility for the relevant Tax Period.

Who is Eligible for Small Business Relief in the UAE?

The Federal Tax Authority states that Resident Persons, including natural persons and juridical persons, can elect for Small Business Relief if they meet the applicable conditions.

The main requirements are:

• The business must be a Resident Person for UAE Corporate Tax purposes.

• Revenue must be AED 3 million or less for the relevant Tax Period.

• Revenue must also be AED 3 million or less in all previous Tax Periods.

• The business must elect for Small Business Relief for the relevant Tax Period.

• The business must not fall within an excluded category.

Two important exclusions are Qualifying Free Zone Persons (QFZPs) and members of multinational enterprise groups where the consolidated group revenue exceeds AED 3.15 billion.

Who cannot elect for Small Business Relief?

Two important exclusions are:

1. Qualifying Free Zone Persons (QFZPs); and

2. Members of multinational enterprise groups (MNEs) where the consolidated group revenue exceeds AED 3.15 billion.

How to Check If Your Business Qualifies

A simple eligibility check can help determine whether a business may be able to claim Small Business Relief.

1. Is the business a Resident Person?

Small Business Relief is available to eligible Resident persons including resident natural and juridical persons. The business or individual should first determine whether they qualify as a Resident Person for UAE Corporate Tax purposes. 

2. Is Revenue AED 3 million or less?

Check the business's Revenue, not simply its profit or Taxable Income.

3. Was Revenue within the threshold in previous Tax Periods?

The test is not limited to the current year. Revenue must be AED 3 million or less in the current and all previous Tax Periods relevant to the SBR rules.

4. Is the business excluded from the relief?

Check whether the business is a QFZP or falls within another excluded category, such as a qualifying member of a multinational enterprise group.

5. Has the business considered the implications of claiming the relief?

Small Business Relief can affect the treatment of Tax Losses and certain disallowed Net Interest Expenditure, so the election should be considered as part of the business's wider Corporate Tax position.

Where SBR is elected, the Taxable Person is treated as having not derived any Taxable Income for that Tax Period. Certain other exemptions, reliefs and deductions are consequently not available for that period. The treatment can also affect the use or carry-forward of Tax Losses and disallowed Net Interest Expenditure. 

Example

A UAE Resident business has:

• 2025 Revenue: AED 2.4 million

• 2026 Revenue: AED 2.7 million

If it meets the other conditions and is not an excluded person, it may be eligible to elect for Small Business Relief for 2026.

Now consider:

• 2025 Revenue: AED 3.4 million

• 2026 Revenue: AED 2.5 million

The business would not meet the Revenue condition for Small Business Relief for 2026 because its Revenue exceeded AED 3 million in the previous Tax Period. The FTA provides a similar example in its current guidance.

How Does the AED 3 Million Threshold Work?

The AED 3 million threshold applies to Revenue, not profit.

This distinction is important because a business with low profit can still exceed the Small Business Relief threshold.

For example:

Business A

• Revenue: AED 2.8 million

• Costs: AED 2.2 million

• Profit: AED 600,000

The business is within the AED 3 million Revenue threshold, subject to the other eligibility requirements.

Business B

• Revenue: AED 3.2 million

• Costs: AED 2.6 million

• Profit: AED 600,000

Although both businesses have the same profit, Business B exceeds the AED 3 million Revenue threshold.

The FTA's guidance confirms that eligibility is based on Revenue and that the threshold must also be considered for previous Tax Periods.

How to Claim Small Business Relief in the UAE

Small Business Relief is claimed through the Corporate Tax compliance process. It is not automatically applied simply because a business's Revenue is below AED 3 million.

The process generally involves:

1. Register for Corporate Tax

A business must complete its Corporate Tax registration and obtain a Tax Registration Number (TRN) to make the SBR election through its Tax Return. 

2. Review eligibility

Check Revenue of AED 3 million or less for the relevant Tax Period and all previous Tax Periods, Resident Person status; and compliance with the applicable exclusions, including those relating to Qualifying Free Zone Persons and certain members of Multinational Enterprise Groups.

3. Review the business's tax position

Consider the implications of claiming the relief, including the treatment of Tax Losses and other relevant items. This is particularly important where the business expects significant taxable profits, losses or deductible expenditure in future Tax Periods.

4. Elect for Small Business Relief

The election is made for the relevant Tax Period through the Corporate Tax Return.

5. Submit the simplified Tax Return

Eligible businesses must submit the required return through the FTA's EmaraTax platform within the applicable statutory timeframe.

6. Maintain supporting records

Businesses should retain records supporting their Revenue, transactions and eligibility for the relief. These records may include accounting records, financial statements, invoices, bank records and other documents relevant to determining Revenue and the business's Corporate Tax position.

The FTA confirmed in 2026 that businesses eligible for Small Business Relief must continue to register, file simplified Tax Returns and maintain relevant supporting documents.

Small Business Relief and Tax Losses

Businesses should consider how claiming Small Business Relief may affect future Tax Periods before making the election. Tax Losses incurred during a Tax Period for which SBR is elected cannot be carried forward to subsequent Tax Periods. Certain disallowed Net Interest Expenditure may also be affected. This means that it is necessary for a business to think about its tax position both now and in the future instead of concentrating on whether the limit of AED 3 million has been attained.

For example, a business with low Revenue in the current year but significant Tax Losses or disallowed Net Interest Expenditure may need to consider whether claiming SBR could affect its ability to utilise those amounts in future Tax Periods.

Businesses should therefore consider both their current-year position and expected future Corporate Tax position before making the SBR election.

Key Takeaway: The decision to claim Small Business Relief should be based not only on eligibility, but also on the potential impact of the election on future Tax Losses and other Corporate Tax attributes. 

Common Small Business Relief Mistakes

Confusing Revenue With Profit

The AED 3 million threshold relates to Revenue, not net profit.

Checking Only the Current Tax Period

Previous Tax Periods also matter. A business cannot qualify based solely on its current Revenue if it fails the applicable previous-period Revenue condition. 

Assuming the Relief Is Automatic

Businesses need to elect for Small Business Relief for the relevant Tax Period.

Assuming No Tax Means No Tax Return

Eligible businesses must still register, file the required simplified Tax Return and maintain supporting records.

Assuming All Free Zone Businesses Qualify

QFZPs are excluded from Small Business Relief. Free Zone businesses should assess their position under the rules applicable to Free Zone Persons.

Ignoring the Impact on Future Tax Periods

Another common mistake is focusing only on the immediate benefit of SBR without considering its longer-term implications.

An SBR election can affect the treatment and future utilisation of Tax Losses and certain disallowed Net Interest Expenditure. Businesses should therefore consider their expected future Corporate Tax position before making the election. 

Small Business Relief UAE: Quick Eligibility Checklist

Before electing for Small Business Relief, check:

• The business is a Resident Person

• Revenue is AED 3 million or less

• Revenue was AED 3 million or less in all relevant previous Tax Periods

• The business is not a QFZP

• The business is not a member of a Multinational Enterprise (MNE) Group with consolidated group revenue exceeding AED 3.15 billion.

• The impact on Tax Losses has been considered

• The Small Business Relief election is made for the relevant Tax Period

• The simplified Corporate Tax Return is filed on time

• Supporting financial and business records are maintained

The FTA states that businesses should maintain records that allow it to verify Revenue, Taxable Income and eligibility for Small Business Relief.

Need Help Checking Your Small Business Relief Eligibility?

Identifying whether a company is eligible for Small Business Relief is not just about seeing whether Revenue is less than AED 3 million. Other criteria such as the company’s history, residency status, Free Zone status, group and corporate tax status will need to be considered.

Founders OS can help companies determine their eligibility for Small Business Relief, as well as identify their corporate tax status and handle their registration and compliance needs.

As a result of bringing together tax, accounting and finance expertise in one firm, companies can access assistance that combines Corporate Tax obligations with the accounting records supporting them.

Need help checking whether your business qualifies for Small Business Relief?

Talk to a Corporate Tax Consultant →

Final Takeaway

Small Business Relief can provide significant Corporate Tax relief for eligible UAE small businesses, but Revenue below AED 3 million alone does not guarantee eligibility.

Businesses should review their Revenue for the relevant and previous Tax Periods, confirm that they meet the applicable conditions, consider the implications of making the election and complete their required Corporate Tax filing.

The 2026 extension means eligible businesses can continue to claim Small Business Relief for Tax Periods ending on or before 31 December 2029, subject to the applicable conditions.

Most importantly, Small Business Relief does not eliminate Corporate Tax compliance. Eligible businesses must still meet their registration, filing and record-keeping obligations.

For businesses approaching the AED 3 million Revenue threshold, reviewing eligibility and the wider Corporate Tax implications in advance can help ensure that the SBR election is made correctly and with a clear understanding of its potential impact on future Tax Periods.

FAQs About Small Business Relief UAE

1. Who Cannot Elect for Small Business Relief?

Not all businesses that qualify through meeting the AED 3 Million Revenue criteria qualifies for Small Business Relief. There are some exemptions, including Qualifying Free Zone Persons (QFZPs), some Multinational Enterprise Group (MNEs) members and some businesses that fail to meet the applicable Revenue criteria.

2.What is Revenue for Small Business Relief?

For SBR purposes, Revenue means the “gross amount of income derived during a Tax Period” as defined in the UAE Corporate Tax Law. Revenue is determined in accordance with the applicable accounting standards accepted in the UAE and includes income from the Business Activities undertaken by the relevant person, subject to the applicable Corporate Tax rules.

Importantly, the AED 3 million SBR threshold is based on Revenue, not profit or Taxable Income. 

3. Can a Free Zone business elect for Small Business Relief?

Yes, in some cases. A Free Zone Person that is not a Qualifying Free Zone Person (QFZP) may be eligible for Small Business Relief if it is a Resident Person and meets the AED 3 million Revenue threshold and other applicable conditions. However, QFZPs cannot elect for Small Business Relief because they are subject to the specific Free Zone Corporate Tax regime. 

4. What if my Revenue exceeds AED 3 Million?

If the Revenue for your business exceeds AED 3 Million for the relevant Tax Period or any applicable previous Tax Period then the Revenue criteria for Small Business Relief is not met. Your business should calculate its Corporate Tax liability according to the standard Corporate Tax provisions.

5. Is Small Business Relief automatic?

No. Small Business Relief is not automatically applied. An eligible business needs to make an election for Small Business Relief for the applicable Tax Period in its Corporate Tax Return.

6. Do I need to file if I claim Small Business Relief?

Yes. Choosing Small Business Relief does not affect your responsibility to file Corporate Tax. All eligible businesses will have to continue fulfilling their responsibilities regarding Corporate Tax filing, including submission of appropriate Tax Return and keeping supporting documentation.

7. Is Small Business Relief available in 2026?

Yes. Eligible businesses can benefit from Small Business Relief during applicable Tax Periods in 2026 if they are eligible for it according to all the requirements, including having AED 3 million Revenue.

8. Is Small Business Relief available until 2029?

Yes. Under Ministerial Decision No. 131 of 2026, Small Business Relief is available to eligible Tax Periods until 31 December 2029 according to all the relevant conditions. The condition of AED 3 million Revenue is included in those requirements.

9. Is the AED 3M threshold based on revenue or profit?

The AED 3 million threshold refers to Revenue, not profit. It is possible for a business to have a small profit while being ineligible for Small Business Relief because of AED 3 million Revenue. Revenue should be considered together with the relevant previous Tax Periods.