Small Business Relief

What is Small Business Relief?

Small Business Relief is a Corporate Tax exemption available to UAE resident businesses with revenue below AED 3 million in a tax period. Businesses that elect for this relief are exempt from Corporate Tax and do not need to file Corporate Tax returns, significantly reducing compliance burden for small enterprises.

Eligibility Criteria

Revenue Threshold: Annual revenue must not exceed AED 3 million
UAE Resident: Must be a UAE resident person for tax purposes
Voluntary Election: Business must elect to apply the relief (not automatic)
Business Type: Available to most business types (restrictions apply to some entities)

Revenue Calculation

Revenue Threshold: AED 3,000,000

Revenue includes all turnover from business activities, excluding:

• Dividend income from qualifying shareholdings
• Other income specifically excluded

Benefits of Small Business Relief

0% Corporate Tax

Complete exemption from 9% Corporate Tax on business profits

No Tax Returns

Exempt from Corporate Tax return filing requirements

Reduced Compliance

Significant reduction in tax compliance costs and administrative burden

Cash Flow Benefit

Retain all profits without Corporate Tax payment

Who Cannot Claim Relief

• Free Zone Persons claiming 0% rate as QFZP
• Members of a multinational enterprise group
• Businesses engaged in certain restricted activities
• Entities that elect not to apply for the relief
• Non-resident persons (must be UAE resident)

Election Process

To benefit from Small Business Relief, eligible businesses must:

1 Register for Corporate Tax with the FTA
2 Elect to apply Small Business Relief when registering or in subsequent periods
3 Ensure revenue remains below AED 3 million threshold
4 Maintain records even though returns are not required

What Happens When Revenue Exceeds AED 3 Million?

If your revenue exceeds AED 3 million in a tax period:

• Small Business Relief no longer applies
• You become subject to 9% Corporate Tax
• Must file Corporate Tax returns from that period onwards
• Can reapply for relief in future periods if revenue drops below AED 3 million

Example Scenarios

Scenario 1: Eligible

Small retail shop with AED 2.5 million annual revenue

Result: Eligible for Small Business Relief. 0% Corporate Tax, no return filing required.

Scenario 2: Not Eligible

Consulting business with AED 3.5 million annual revenue

Result: Not eligible. Subject to 9% Corporate Tax on profits exceeding AED 375,000.

VAT Obligations Continue

Important Note

Small Business Relief only applies to Corporate Tax. If your business is registered for VAT (revenue exceeds AED 375,000), you must continue to comply with all VAT obligations including filing returns and making payments.