Small Business Relief (SBR) lets eligible UAE businesses be treated as having no taxable income for a tax period — which means no corporate tax to pay. For thousands of SMEs, startups and freelancers, it is the single most valuable relief in the UAE corporate tax regime. But it is not automatic. You must still register, keep proper records and elect the relief in your corporate tax return. Get the election wrong, and you lose the benefit for that year.
Our team reviews your eligibility, prepares your return and makes the SBR election correctly through EmaraTax.
What Is Small Business Relief?
SBR was introduced under Article 21 of the Corporate Tax Law and set out in Ministerial Decision No. 73 of 2023. It allows a resident person whose revenue does not exceed AED 3 million in a tax period to elect to be treated as having no taxable income for that period.
The relief originally covered tax periods ending on or before 31 December 2026. In August 2026 the Ministry of Finance issued Ministerial Decision No. 131 of 2026, extending SBR to tax periods ending on or before 31 December 2029. The AED 3 million threshold did not change — only the timeline.
Who Is Eligible for Small Business Relief?
You can elect SBR for a tax period if all of these conditions are met:
- You are a UAE resident person — a mainland or free zone company, or a natural person doing business in the UAE.
- Revenue is AED 3 million or less in the current tax period and in every previous tax period. Once revenue goes above AED 3 million in any period, you cannot return to SBR later.
- You are not a Qualifying Free Zone Person (QFZP). QFZPs have their own 0% regime and are excluded from SBR.
- You are not part of a large multinational group — members of MNE groups with consolidated group revenue above AED 3.15 billion are excluded.
- You are registered for corporate tax and file your return on time.
Revenue is measured on the basis of your financial statements, following the accounting standards you apply. If your bookkeeping is weak, your revenue figure can be challenged, so accurate bookkeeping matters.
How to Elect Small Business Relief
The election is made inside your corporate tax return on EmaraTax. There is no separate application. The steps are:
- Register for corporate tax if you haven’t already — see our guide to corporate tax registration on EmaraTax.
- Close your books for the tax period and confirm total revenue.
- Check eligibility against every condition above, including revenue in all earlier periods.
- Select the SBR election in the corporate tax return and declare your revenue.
- Submit the return within nine months of the end of your tax period.
A business that elects SBR still files a return — it simply reports no taxable income. Missing the filing deadline triggers penalties even if no tax would have been due.
What You Give Up by Electing SBR
SBR is generous, but it has trade-offs that every owner should understand before electing:
- Tax losses from an SBR period cannot be carried forward. If you make a loss this year and elect SBR, that loss is gone. In some cases, not electing and carrying the loss forward is the better long-term choice.
- Disallowed net interest from SBR periods cannot be carried forward either.
- Several other provisions don’t apply for that period, such as reliefs and deductions that only work when taxable income is calculated in full.
On the other side, electing SBR removes the need to prepare transfer pricing documentation for that period, and businesses below the revenue threshold may prepare financial statements using the cash basis of accounting.
We model both options — electing and not electing — so you can see which leaves you better off over several years. Our corporate tax consultancy team handles this review.
Anti-Abuse Rules: Don't Split Your Business
The FTA can deny SBR if a business has been artificially separated to keep each part under AED 3 million. Splitting one trading activity across several licences, without a real commercial reason, is the classic example. Penalties apply where artificial separation is found. If you run several connected businesses, get advice before electing.
Small Business Relief for Free Zone Companies
Free zone companies can elect SBR as long as they are not claiming Qualifying Free Zone Person status. For a small free zone company, it is worth comparing both routes: SBR is simpler, while QFZP status requires substance, audited accounts and careful income classification. Learn more on our corporate tax for free zone companies page and our Qualifying Free Zone Person guide.
Get Expert Help for Your Business
Talk to an FTA-approved tax consultant today. Free consultation, no obligation — we’ll tell you exactly what your business needs.
Penalties to Avoid
SBR does not protect you from compliance penalties. The most common ones we see are:
- Late corporate tax registration — AED 10,000.
- Late filing of the corporate tax return — monthly penalties until filed.
- Poor record-keeping — fines if you cannot support your revenue figure.
If you have already received a penalty, our corporate tax penalty support team can review whether a waiver or reconsideration is possible.
How We Help
Our fixed-fee SBR service includes:
- Eligibility review against all SBR conditions, including past periods
- Revenue confirmation from your books, or backlog accounting if records are behind
- Elect / don’t-elect comparison, including the effect on losses
- Preparation and filing of your corporate tax return
- Ongoing reminders for every future filing deadline
See the fee on our accounting packages and pricing page, or explore the full range of corporate tax services in the UAE and our dedicated corporate tax for SMEs support.
Call +971 52 406 3000 or contact our team to check your eligibility today.
Frequently Asked Questions
The limit is AED 3 million of revenue in the current tax period and in every earlier tax period. If revenue exceeds AED 3 million in any period, SBR is no longer available for later periods.
Yes. Ministerial Decision No. 131 of 2026 extended SBR to tax periods ending on or before 31 December 2029. The AED 3 million threshold stayed the same.
No. You must elect it in your corporate tax return on EmaraTax. You also need to be registered for corporate tax and file the return on time.
Yes, if it is not a Qualifying Free Zone Person. A free zone company cannot claim both QFZP status and SBR for the same period.
Losses incurred in a tax period where you elect SBR cannot be carried forward to future periods. It is worth comparing both options before you elect.
Yes. You must keep records that support your revenue figure and other information in your return, and the FTA can review them.