Corporate tax can feel overwhelming for small business owners in the UAE, especially with the new rules in place.
The good news is that the government has introduced Small Business Relief to make things easier for qualifying companies.
In this guide, we will walk you through what it is, who can apply, how it works, and how to avoid common mistakes so you can focus on growing your business.
Keep reading to see if you qualify and how you can benefit from this relief.
What Is Small Business Relief Under UAE Corporate Tax?
Small Business Relief is a special provision under the UAE corporate tax law that helps smaller companies reduce or even eliminate their corporate tax burden.
It was designed to support startups, entrepreneurs, and small enterprises so they can reinvest profits back into their growth.
Under this relief, qualifying businesses are treated as if they have no taxable income for the relevant tax period.
This means they will not have to pay the standard 9% corporate tax during that period, but they will also not be able to claim other exemptions, reliefs, or deductions.
Who Can Benefit from Small Business Relief in the UAE?
Many small businesses across different industries can take advantage of this relief. However, there are specific rules you need to meet before you can apply.
Eligibility Criteria for Small Business Relief
To qualify, your business must:
- Have revenue below AED 3 million for the relevant tax period and all previous tax periods combined
- Be within the applicable tax years (from 1 June 2023 to 31 December 2026)
- Not be part of an excluded business category such as certain extractive industries
Which Business Structures Qualify
Small Business Relief is available to resident taxable persons that meet the revenue test and other conditions. It is not available to Qualifying Free Zone Persons or to members of a multinational enterprise group with consolidated revenue above AED 3.15 billion.
Industries Commonly Benefiting
Businesses in sectors like consulting, marketing, retail, e-commerce, and professional services often meet the criteria. Startups and SMEs in their early growth stage are especially likely to qualify.
How Small Business Relief Works for UAE Corporate Tax
Small Business Relief changes how your corporate tax is calculated and applied. Here is what you need to know before filing.
✅ Tax Rates and Relief Impact
Normally, the UAE imposes a 9% corporate tax on taxable income above AED 375,000. With Small Business Relief, qualifying businesses are treated as if they have no taxable income, meaning they will not have to pay this 9% tax during the relief period.
✅ Excluded Persons and Free Zone Interaction
Small Business Relief is only for resident taxable persons. It cannot be used by a Qualifying Free Zone Person or by a member of a large multinational group.
Free zone companies that are not Qualifying Free Zone Persons may elect Small Business Relief if they meet all conditions, including the AED 3 million revenue threshold.
✅ Carrying Forward Tax Losses
If you elect Small Business Relief for a tax period, losses from that period cannot be carried forward.
Losses from periods where you did not elect Small Business Relief can still be carried forward and used in future periods where you do not elect it, subject to the law.
⚠️ Note: The Federal Tax Authority can deny Small Business Relief if it finds a business was artificially split to stay under the revenue threshold, based on financial, economic, or organizational links.
📚 Also read: Best Business in UAE 2025
How to Apply for Small Business Relief UAE Corporate Tax
Applying for this relief is a straightforward process, but accuracy is key. Mistakes can delay approval or lead to penalties.
Step-by-Step Application Process
- ✅ Prepare accurate financial statements showing your revenue
- ✅ Log in to the EmaraTax portal and fill out your corporate tax return
- ✅ Select the option to claim Small Business Relief
- ✅ Submit your return with all supporting documents
📚 Also read: How to Register for Corporate Tax in UAE
Required Documents
- ✅ Valid trade license
- ✅ Proof of annual revenue such as audited statements or bank records
- ✅ Any additional forms requested by the FTA
Deadlines to Remember in 2025
Mark these dates in your calendar:
- ✅ Corporate tax filing deadline for your tax period
- ✅ Registration deadlines if you are not yet registered
📚 Also read: UAE Corporate Tax Registration Deadline
Key Updates for 2025 – What’s New in UAE Small Business Relief
Tax laws are updated frequently to keep up with economic needs. For 2025, the main updates include:
- ✅ Continued AED 3 million revenue threshold for eligibility
- ✅ Clarifications on how relief applies to businesses with fluctuating revenue
- ✅ More detailed compliance checks by the FTA to prevent misuse
These updates mean business owners should track their revenue closely and stay informed on official announcements.
Common Mistakes When Claiming Small Business Relief
Even small errors in your application can cost you the chance to benefit from this relief.
✅ Misreporting Revenue
Underreporting or incorrectly calculating your revenue can lead to penalties and disqualification. Always use verified figures from your financial records.
✅ Missing Deadlines
Late filing can result in losing eligibility for the relief and paying penalties. Set reminders to avoid last-minute stress.
✅ Not Keeping Proper Records
Without detailed records, it is hard to prove you qualify. Keep invoices, receipts, and bank statements organized.
✅ Assuming All Free Zones Are Automatically Eligible
Some free zone companies may not qualify if they are considered Qualifying Free Zone Persons or if they exceed the revenue threshold.
Small Business Relief vs Other UAE Corporate Tax Incentives
Small Business Relief is just one of several tax benefits available in the UAE. Knowing your options can help you make the best choice.
- ✅ Free Zone 0% Corporate Tax: Many free zones offer 0% tax, but businesses must meet strict requirements and may not be eligible for Small Business Relief at the same time.
- ✅ Sector-Specific Exemptions: Certain industries such as natural resource extraction have their own exemptions.
- ✅ Low-Cost Business Setup: Starting in a cost-effective free zone or mainland location can also save money.
📚 Also read: Low-Cost Business Setup in Dubai UAE
Conclusion
Small Business Relief under UAE corporate tax is a valuable opportunity for qualifying businesses to save money and reinvest in growth. By understanding the eligibility rules, application process, and common mistakes, you can make the most of this benefit.
If you need expert guidance on corporate tax, VAT returns, or staying compliant with UAE regulations, Outsource Prime Accountants and Bookkeepers (OPAB) can help. Get in touch with us and start securing your financial compliance today.
FAQs About Small Business Relief UAE Corporate Tax
What are the exemptions for corporate tax in UAE?
Corporate tax exemptions in the UAE can apply to specific sectors such as natural resource extraction, qualifying free zone businesses, and certain government entities. These exemptions are designed to encourage investment and support key industries. Businesses should review the corporate tax law to see if they qualify for any exemptions outside Small Business Relief.
Can I register my business in Dubai to avoid taxes?
Registering in Dubai alone does not automatically exempt you from corporate tax. Your tax obligations depend on your business activity, location, and whether you meet the criteria for relief or other exemptions. Always check official guidelines before making decisions based on tax savings.
What is the de minimis rule for taxes in UAE?
The de minimis rule applies to Qualifying Free Zone Persons to maintain 0% tax on qualifying income and is unrelated to Small Business Relief. It sets a limit on non-qualifying revenue compared to total revenue. If a free zone business exceeds that limit, it loses its qualifying status for that period.
What is the threshold for UAE corporate tax?
Corporate tax in the UAE applies at 9% on taxable income above AED 375,000. Businesses under this income level are taxed at 0%, and those meeting Small Business Relief criteria may continue to pay no corporate tax even if their income exceeds AED 375,000, provided revenue stays under AED 3 million.
