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FORMENZO GUIDES · UAE FREE-ZONE FORMATION

UAE Small Business Relief — AED 3M revenue cap, expires 31 Dec 2026

Ministerial Decision 73 of 2023 lets eligible UAE businesses with revenue ≤ AED 3,000,000 elect 0% Corporate Tax for tax periods ending before 31 December 2026. Eligibility, election mechanics, and what happens after expiry.

Last updated: Reviewed by · UAE-resident team · DubaiWorkbook-verified against authority pricing

Key topics on this page

  • UAE Small Business Relief
  • AED 3 million tax relief
  • Ministerial Decision 73 2023
  • UAE Corporate Tax SME
  • UAE startup tax exemption

Frequently asked questions

What is the revenue cap for Small Business Relief?

AED 3,000,000. The cap is cumulative — revenue in the current tax period and in all previous tax periods must not exceed AED 3,000,000. Once revenue crosses the cap in any tax period, SBR becomes unavailable for that period and for all subsequent periods.

When does Small Business Relief expire?

The relief is available for tax periods ending on or before 31 December 2026. For a business with a calendar-year financial year, the last eligible tax period is the year ending 31 December 2026. The Ministry of Finance could publish an extension; the cleanest practical assumption is to plan around the published expiry date.

Is Small Business Relief automatic?

No. SBR is elected on the Corporate Tax return for the relevant tax period, submitted through the EmaraTax portal. Without the election, the standard regime applies and the 9% rate above AED 375,000 takes effect.

Can a Qualifying Free Zone Person also elect for Small Business Relief?

No. QFZP and SBR are mutually exclusive. A free-zone person electing for SBR cannot also be a QFZP for the same tax period, and a QFZP cannot also elect SBR. Discuss the trade-off with a UAE-licensed tax adviser before deciding.

Can I split my business into multiple entities to use the relief multiple times?

No. The Ministerial Decision contains an anti-fragmentation rule. The FTA can treat the artificial separation of a single business into multiple resident persons (each under AED 3,000,000) as an arrangement designed to obtain SBR and disregard the separation. The cumulative revenue across the related entities will be assessed.

What do I give up if I elect SBR?

Tax losses and net interest expenditure incurred in an SBR-elected tax period cannot be carried forward to offset taxable income in later periods. For a profitable small business this is usually a no-cost give-up; for a business investing heavily (debt financing, loss-led customer acquisition), the calculation is different.

Do I still have to register for Corporate Tax if I plan to elect SBR?

Yes. Every taxable person registers for Corporate Tax with the Federal Tax Authority on EmaraTax, inside the deadline keyed to the trade-licence-issuance month. SBR is a calculation simplification, not a registration exemption. You also have to maintain records and file a return for the elected period.

Does SBR affect my VAT obligations?

No. SBR is a Corporate Tax election. VAT operates independently under Federal Decree-Law No. 8 of 2017. If your taxable supplies and imports cross the VAT thresholds, you register, charge VAT, recover input VAT, and file VAT returns as a separate compliance track.

What happens to my tax position after the SBR cliff-edge?

Tax periods that end after 31 December 2026 default to the standard Corporate Tax regime (subject to any extension the Ministry of Finance publishes). Taxable income above AED 375,000 is taxed at 9%. Losses and net interest expenditure from SBR-elected periods do not become usable in the post-cliff period.

Is SBR a permanent feature of UAE Corporate Tax?

As currently published, no. The relief is time-limited to tax periods ending on or before 31 December 2026. The Ministry of Finance may extend the relief in the future. Plan conservatively around the published expiry date and revisit your tax position with a UAE tax adviser annually.

Does Formenzo elect SBR for me?

No. Formenzo is an aggregator and comparison platform. We surface AED prices from uploaded workbooks, run a bank-readiness signal, and flag Corporate Tax registration in your case checklist. We do not file Corporate Tax returns and do not provide tax advice. For the SBR election itself, work with a UAE-licensed tax adviser.

What is the difference between SBR and the AED 375,000 0% band?

The AED 375,000 0% band is part of the standard Corporate Tax regime: every taxable person pays 0% on the first AED 375,000 of taxable income and 9% above. SBR is a separate election that treats taxable income as zero for the whole tax period, subject to the AED 3,000,000 revenue cap and the cliff-edge. The two coexist in different scenarios — you pick one or the other (and SBR overrides the standard regime calculation for the elected period).

Sources cited

Citations are to public UAE law and authority publications. Formenzo's own pages are not authoritative on the law itself — read the cited source for the operative text.

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