The most generous line in UAE corporate tax law has an expiry date: relief for financial periods ending on or before 31 December 2026. If your revenue is at or under AED 3M, this year's election deserves ten deliberate minutes — and one real calculation.
Small Business Relief lets a UAE resident business with revenue at or below AED 3,000,000 elect to be treated as having no taxable income — the return is still filed, but the tax due is zero. It runs only for financial periods ending on or before 31 December 2026, and it must be claimed in the return, not applied by default. In our practice registering and running UAE companies, the relief is usually won or lost on two things: watching the 3M revenue line monthly, and not confusing it with the QFZP 0% regime.
Small Business Relief (Ministerial Decision No. 73 of 2023) is not a lower rate — it is a switch. A resident business that elects it is treated as having no taxable income for the whole period: the corporate tax return is still filed, but the tax due is zero. That is the difference between it and the automatic AED 375,000 threshold. The threshold shaves the first slice of profit; the relief looks at revenue and, if you are under the line, removes taxable income entirely — nothing above AED 375,000 is taxed either.
The relief also simplifies the sums. In a period under it you do not compute taxable income in the usual detail, and expenses are not deducted the ordinary way — there is simply no taxable base. But it is a filing, not a holiday from the system: you remain a registered taxpayer with a return to submit, and the relief is claimed inside that return.
The relief is for resident persons — a UAE company, or a natural person running a business — whose revenue stayed at or below AED 3,000,000 in the current period and in every previous tax period since the regime began. Two groups are shut out by design, however small their revenue:
| Status | Who |
|---|---|
| Eligible | Resident company or individual with revenue ≤ AED 3M in the current and all prior periods |
| Not eligible | Free zone company claiming the QFZP 0% regime — you choose one, not both |
| Not eligible | Constituent member of a large multinational group (the Pillar Two population) |
| Not eligible | Any business that has exceeded AED 3M revenue in any period since 1 June 2023 |
Note the asymmetry in the last row: the AED 3M test is not annual. Breach it once and the relief is gone for that period and for good — you cannot drop back under the line next year and re-elect.
Revenue, not profit, is what the test reads — gross income for the period under the accounting standards you already use, before any expenses. A business with AED 2.9M of revenue and thin margins is comfortably eligible; one with AED 3.1M of revenue and a loss is not. Because the line is drawn on revenue, a single large invoice near year-end can end eligibility for the entire period, so the number to watch is running twelve-month revenue, not the calendar-year figure in the accounts.
One trap sits underneath the arithmetic: you cannot split a business to stay small. Carving one operation into two licences purely to keep each under AED 3M is exactly the artificial separation the general anti-abuse rule is written to catch, and the FTA can look through it. The relief rewards genuinely small businesses, not small-looking ones.
A period under relief does not build the assets a normal taxable period does. Tax losses cannot be carried forward out of a relief period, and disallowed net interest cannot be carried either. For a young company that expects to be loss-making now and profitable later, electing the relief in a loss year can quietly waste losses that would have sheltered future profit — sometimes the arithmetic says take the 9% computation, bank the loss, and skip the relief.
The second trade-off is the free zone one. A company that qualifies as a Qualifying Free Zone Person cannot also claim Small Business Relief for the same period; the two regimes are mutually exclusive. SBR is simpler and needs no de-minimis tracking, but it expires and blocks those carried-forward losses; QFZP is permanent but demands substance, audits and transfer-pricing discipline every year. The 0% guide walks the full comparison.
The relief is not applied by default. It must be claimed in the corporate tax return for each period you want it, and you still have to register for corporate tax and file that return within nine months of the period end. A business that qualifies but forgets to elect pays 9% on everything above AED 375,000 as if the relief did not exist.
The expiry is fixed to the period-end date, not the filing date. The relief is available for financial periods ending on or before 31 December 2026. For a calendar-year company, that makes the year ending 31 December 2026 the last eligible period — the return itself is filed in 2027. After the window closes, unless the Ministry of Finance extends it, eligible businesses fall back to the standard 0% on the first AED 375,000 and 9% above.
Three moves cover it. First, track trailing twelve-month revenue against the AED 3M line monthly, not once a year — the relief is lost on the day you cross, not the day you notice. Second, if you hold a free zone licence, settle the SBR-versus-QFZP question in writing before year-end, because you cannot claim both and the wrong default costs money either way. Third, keep proper books regardless: the relief still requires a filed return, and the day the window closes you will need accounts that prove your profit sits where you say it does.
The whole decision takes an afternoon with real numbers. Model your period in the corporate tax calculator, compare the relief against a plain 0%/9% computation, and — if you are loss-making or near the 3M line — check whether electing actually helps before you do it.
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