With the implementation of UAE Corporate Tax in 2023, thousands of small businesses across Dubai, Abu Dhabi, and other Emirates became subject to new tax rules. To ease the burden on startups and SMEs, the UAE introduced Small Business Relief (SBR) — a special mechanism designed to simplify compliance for qualifying companies.
As we enter 2025, understanding how Small Business Relief works, who qualifies, and what risks exist is crucial for business owners. This guide explains the Small Business Relief rules under UAE Corporate Tax and provides practical tips for compliance.
What is Small Business Relief?
Small Business Relief (SBR) is a special provision under Federal Decree-Law No. 47 of 2022 (Corporate Tax Law) that allows eligible small businesses to be treated as if they have no taxable income.
This means that qualifying businesses:
- Pay 0% corporate tax even if they make a profit
- Benefit from simplified compliance (easier filings, less admin burden)
The aim is to support SMEs and encourage entrepreneurship in the UAE.
Eligibility Criteria in 2025
To qualify for Small Business Relief in 2025, companies must meet the following conditions:
- Revenue Threshold:
- Revenue must not exceed AED 3 million for the relevant tax period and all previous tax periods ending on or before 31 December 2026.
- Entity Type:
- Applies to resident juridical persons (companies incorporated in the UAE, including Free Zone entities that do not opt for the QFZP regime).
- Does not apply to multinational enterprises or large corporations
- Exclusions:
- Businesses that are part of multinational enterprise groups (MNEs) with consolidated global revenues ≥ AED 3.15 billion are not eligible.
- Qualifying Free Zone Persons (QFZPs) claiming the 0% tax regime cannot elect SBR.
Benefits of Small Business Relief
✅ 0% Corporate Tax liability if within threshold
✅ Reduced compliance burden — simpler filing
✅ Cash flow advantage — funds retained in business
✅ Encouragement for SMEs — fosters growth and entrepreneurship
Risks and Limitations
While SBR is highly beneficial, there are some key considerations:
- Exceeding AED 3m revenue: If your revenue goes above AED 3m in any year before 2026, Small Business Relief no longer applies. From that point, corporate tax applies in full.
- Artificial arrangements: The FTA closely monitors attempts to artificially split businesses to stay under the threshold. Penalties may apply.
- Documentation still required: Even with SBR, businesses must maintain proper IFRS-based financial records to prove eligibility.
Relief does not mean exemption from bookkeeping or reporting.
Filing Obligations Under SBR
- Companies must elect to claim SBR when filing their Corporate Tax return.
- Even if paying 0% tax, a CT return must be filed with the FTA.
- Businesses must keep supporting documents (invoices, ledgers, contracts) for at least 5 years.
Practical Example
Scenario A – SME Eligible for Relief
A consulting company earns AED 2.5 million in 2024 with AED 400,000 profit. Since revenue ≤ AED 3m, it qualifies for SBR. Result → 0% Corporate Tax payable in 2025.
Scenario B – SME Exceeds Threshold
An e-commerce company earns AED 3.2 million in 2024. Since revenue exceeds AED 3m, it no longer qualifies for SBR. Corporate Tax applies → first AED 375k @ 0%, remaining taxable income @ 9%.
Small Business Relief vs Other Regimes
- SBR vs Normal Corporate Tax: SBR avoids the 9% tax on profits, but only if below the AED 3m threshold.
- SBR vs Free Zone QFZP: Free Zone entities can enjoy 0% CT on qualifying income if they meet QFZP rules — but cannot claim SBR at the same time.
- SBR vs Exempt Entities: Exempt entities (government, charities, natural resources) are outside CT completely. SBR is an election, not an exemption.
Compliance Tips for SMEs in 2025
- Track your revenue monthly to avoid breaching the AED 3m limit unexpectedly.
- Maintain full IFRS-compliant records even if electing SBR.
- Plan for growth: If revenue is approaching AED 3m, prepare for transition to normal CT regime.
- Avoid artificial splitting of businesses — the FTA can deny SBR in such cases.
- File your CT return correctly — even with 0% liability.
Conclusion
Small Business Relief is one of the UAE’s most SME-friendly tax measures, providing a 0% corporate tax liability for eligible companies until 31 December 2026.
However, business owners must remain vigilant: exceeding revenue thresholds, poor documentation, or misuse of the relief can lead to penalties.
For startups and SMEs, SBR is a golden opportunity to reinvest profits, strengthen operations, and grow in a tax-efficient way.
Call to Action
At Advanced AnalytIQ, we help SMEs and startups navigate UAE Corporate Tax with confidence. Our services include:
- Corporate Tax registration & filing
- SBR eligibility checks & advisory
- Bookkeeping & IFRS-compliant reporting
- Audit & assurance for growing businesses
Contact us today to ensure your small business makes the most of UAE Corporate Tax Relief in 2025.