Corporate Tax in UAE: What Small Businesses Should Know

With the UAE’s Corporate Tax regime now in effect under Federal Decree-Law No. 47 of 2022, small businesses have a golden opportunity to ease their compliance load through Small Business Relief— introduced by Ministerial Decision No. 73 of 2023.

What Is Small Business Relief?

Small Business Relief (SBR) is designed to support Resident Persons — whether individuals or companies — by reducing administrative and tax burdens during the early stages of the new corporate tax framework.

Eligible businesses can elect to be treated as having no taxable income for a given tax period, meaning:

• No corporate tax payable (0% tax).
• Simplified tax filing using a short-form return.
• Reduced record-keeping and no transfer pricing documentation required.

Who Qualifies for Small Business Relief?

To qualify, a UAE-based business must meet all of the following conditions:

• Annual revenue ≤ AED 3 million in the current and all previous tax periods (up to 31 December 2026).

• Be a Resident Taxable Person (either a natural or juridical person).

• Not be part of a Multinational Enterprise Group (MNE) with global revenue over AED 3.15 billion.

• Not be a Qualifying Free Zone Person (QFZP), as they already enjoy preferential 0% rates on qualifying income.

Note: Once a business exceeds the AED 3 million revenue threshold, it permanently loses eligibility for SBR — even if future revenue falls below this limit.

How Does It Work?

If you qualify and elect SBR on your tax return:

• You are considered to have zero taxable income.

• You don’t pay corporate tax for that period.

• You file a simplified return instead of the full corporate tax filing.

However, you cannot:

• Carry forward or utilize tax losses for that year.
• Apply interest deduction or other reliefs.
• Participate in intragroup transfer or restructuring reliefs for that period.

Who Cannot Claim Small Business Relief?

• MNEs.

• QFZPs.

• Businesses artificially split to stay below AED 3 million revenue — such cases may attract penalties from the FTA.

Relief Validity

Small Business Relief applies only to tax periods ending on or before 31 December 2026. Businesses should plan as the relief is temporary and designed to aid a smooth transition into the corporate tax system.

Compliance & Filing

Small businesses, even though eligible, have to:

• Apply to get Corporate Tax and be provided with a Tax Registration Number (TRN).
• Elect SBR in their tax return in respect to every relevant period.
• Keep records that document eligibility (e.g. revenue statements, financial accounts).

Key Takeaways for Business Owners

• SBR offers a practical tax-free buffer for small UAE enterprises.

• Use this period to strengthen bookkeeping and tax readiness.

• Ensure accurate revenue reporting — exceeding the threshold, even once, ends eligibility.

Contact AMCA Auditing for Hassle-Free Compliance

Navigating corporate tax can be complex — but you don’t have to do it alone. At AMCA Auditing, we help small businesses:

• Assess eligibility for Small Business Relief.
• Make proper registration and filing.
• Prepare the strategy of the post-relief period.

Reach out to AMCA today to secure your compliance and peace of mind.