Running a small business in the UAE? You may qualify for Small Business Relief (SBR) under the UAE Corporate Tax framework. This initiative helps SMEs by minimizing tax burdens, simplifying compliance, and enabling long-term financial stability, so business owners can focus on growth and innovation.
What is Small Business Relief?
Small Business Relief (SBR) is an optional tax provision under UAE Corporate Tax Law that simplifies compliance for eligible businesses.
Ministerial Decision No. 73 of 2023 outlines the regulations governing this initiative.
Key Benefits of Small Business Relief
- Reduced Compliance Costs – Minimized paperwork and fewer tax filings.
- Tax Savings – No Corporate Tax for eligible businesses, leading to higher retained earnings.
- Business Growth Opportunities – More capital available for operations, expansion, and innovation.
This initiative is part of the UAE’s broader strategy to support entrepreneurship, drive economic resilience, and encourage SME growth.
Who Qualifies for Small Business Relief?
Businesses qualify if their revenue does not exceed AED 3,000,000 in:
- The current Tax Period
- The previous Tax Periods
How is Revenue Calculated?
Revenue must adhere to applicable accounting standards, ensuring financial transparency and compliance with UAE regulations.
Who is Not Eligible?
Certain businesses are excluded from Small Business Relief:
- Multinational Enterprise Groups (MNEs): Companies with a global presence.
- Qualifying Free Zone Persons: Entities already benefiting from the 0% Corporate Tax regime in Free Zones.
For most local SMEs, however, this initiative presents a valuable opportunity to optimize tax obligations and focus on expansion.
Can Small Businesses Claim Tax Losses and Interest Deductions Under Small Business Relief?
While Small Business Relief offers advantages, small businesses in the UAE should also assess the impact on tax losses and interest deductions:
- Current Tax Period: Tax losses and net interest expenditure cannot be carried forward.
- Previous Tax Periods: Unutilized tax losses from non-relief years can still be carried forward, allowing businesses to offset taxable income in future periods and reduce tax liabilities.
Effective tax planning will help you maximize your savings and reinvest in business growth.
Final Thoughts
For SMEs in the UAE, Small Business Relief provides a significant financial advantage.
- If your business qualifies, you gain improved cash flow, simpler tax compliance,
and expansion support. - If your revenue is nearing the threshold, strategic tax planning can help optimize tax benefits while preparing for future growth.
As the UAE strengthens its business friendly tax framework, Small Business Relief highlights its commitment to uplifting small businesses, promoting reinvestment, and fostering economic growth.
FAQs
1. What happens if my business exceeds the AED 3,000,000 threshold?
If revenue surpasses AED 3,000,000, the business is no longer eligible for Small Business Relief and becomes subject to standard Corporate Tax regulations.
2. Can I opt in and out of Small Business Relief each year?
Yes, but businesses must elect for Small Business Relief during the relevant Tax Period. Once opted out, reapplication is not possible.
3. Does Small Business Relief impact future tax loss claims?
Yes, businesses electing for relief cannot carry forward tax losses or net interest expenses for the current period. However, past losses from non-relief years remain eligible for carryforward.
4. Can multiple small businesses under the same owner qualify?
Each business is assessed individually. However, additional regulations may apply if they are part of a larger corporate structure.
5. What documents are required to claim Small Business Relief?
Businesses must formally elect for the relief when filing their Corporate Tax return. Compliance with UAE accounting standards is necessary to validate eligibility.
6. How does the AED 3 million revenue threshold impact Small Business Relief eligibility?
The AED 3 million revenue threshold applies to Tax Periods starting on or after June 1, 2023, and remains in effect for Tax Periods ending on or before December 31, 2026.
If a business exceeds this threshold in any Tax Period, it becomes ineligible for Small Business Relief in the current and future periods.
Need assistance with UAE Corporate Tax? Contact us today to optimize your tax strategy and maximize savings.