UAE Small Business Relief (SBR) allows resident taxpayers with annual revenue at or below AED 3 million to treat their taxable income as zero — effectively paying no corporate tax. SBR must be actively elected on the tax return filed through the EmaraTax portal. 2026 is the final year of eligibility: the relief applies only to tax periods ending on or before 31 December 2026. Last updated: May 2026.
For the standard 9 % rate mechanics, see UAE Corporate Tax: how the 9 % rate works in 2026. For the broader GCC tax comparison, see taxation in the GCC: a complete guide for foreign businesses.
What is Small Business Relief?
Small Business Relief is a temporary measure under Ministerial Decision No. 73 of 2023 that allows qualifying UAE resident taxpayers to elect zero taxable income for a tax period. The mechanism was designed to ease the transition for small businesses entering the UAE’s first-ever federal corporate tax regime, which took effect on 1 June 2023.
SBR does not exempt a business from corporate tax registration. Every UAE entity — including those electing SBR — must register with the Federal Tax Authority through the EmaraTax portal. Late registration incurs an AED 10,000 penalty under FTA Decision No. 3 of 2024.
Who qualifies for SBR?
Three conditions must be met simultaneously:
- UAE resident taxpayer — the entity must be a legal person incorporated or effectively managed in the UAE (mainland, free zone, or branch)
- Revenue at or below AED 3 million — measured per tax period. Revenue includes all income, not just UAE-sourced income. If revenue exceeds AED 3 million in any tax period, SBR is unavailable for that period.
- Active election on the tax return — SBR does not apply automatically. The taxpayer must select the SBR election on the corporate tax return filed through EmaraTax. Failing to elect means the standard 9 % rate applies.
Who cannot use SBR?
Two categories of entities are explicitly excluded from SBR:
- Qualifying Free Zone Persons (QFZPs) — free zone entities benefiting from the 0 % rate under Ministerial Decision No. 229 of 2025 cannot also elect SBR. The two regimes are mutually exclusive.
- Members of Multinational Enterprise (MNE) groups — entities belonging to MNE groups with consolidated global revenue exceeding EUR 750 million are ineligible for SBR.
Additionally, SBR is unavailable for tax periods ending after 31 December 2026. According to Crimson Legal’s May 2026 compliance guide, no extension has been announced.
What are the trade-offs of electing SBR?
Electing SBR eliminates tax liability but forfeits two valuable mechanisms:
- Tax loss carry-forward — losses incurred during an SBR-elected period cannot be carried forward to offset taxable income in future years. Normally, UAE corporate tax allows losses to be carried forward indefinitely and offset against up to 75 % of future taxable income.
- Net interest deduction — interest expenses incurred during an SBR-elected period cannot be deducted in future periods under the thin-capitalisation rules.
For businesses expecting to grow past AED 3 million in the next 1 to 2 years, electing SBR may be short-sighted. The loss carry-forward forfeiture means early-stage losses cannot reduce future tax bills — a significant cost for startups that invest heavily before becoming profitable.
When does SBR end?
SBR applies to tax periods ending on or before 31 December 2026. For businesses with a standard January–December fiscal year, the 2026 tax return (filed by 30 September 2027) is the last return on which SBR can be elected.
After 2026, all UAE businesses with taxable income above AED 375,000 will pay 9 % corporate tax, regardless of revenue size. The AED 375,000 zero-rate band continues permanently — it is part of the Corporate Tax Law itself, not part of the SBR temporary measure.
How does SBR compare to QFZP?
| Dimension | Small Business Relief | QFZP 0 % rate |
|---|---|---|
| Effective tax rate | 0 % (on elected period) | 0 % on qualifying income |
| Revenue threshold | AED 3 million | No revenue threshold |
| Duration | Temporary — ends 31 Dec 2026 | Permanent (no published sunset) |
| Substance requirements | None | Adequate employees, office, expenses |
| Audited financials | Not required | Mandatory (IFRS-compliant) |
| Loss carry-forward | Forfeited | Preserved |
| Available to free zone entities | No (if QFZP) | Yes (by design) |
| Compliance cost | Minimal — simple election | AED 5,000–15,000/year (audit + TP docs) |
For businesses below AED 3 million with no intention of claiming QFZP, SBR is the simpler path through 2026. For businesses expecting rapid growth, preserving loss carry-forward by not electing SBR may produce a lower lifetime tax bill.
Frequently asked questions
Can I elect SBR for one year and not the next?
Yes. SBR is elected per tax period. A business can elect SBR for 2024, skip it for 2025, and elect it again for 2026. Each election is independent. Loss carry-forward is forfeited only for the specific periods in which SBR is elected.
Does SBR eliminate the requirement to file a tax return?
No. All UAE entities must file a corporate tax return within 9 months of the fiscal year-end, regardless of whether SBR is elected. The return simply shows zero taxable income for the SBR-elected period.
Will SBR be extended beyond 2026?
No extension has been announced as of May 2026. The FTA has not published guidance suggesting a renewal. Businesses should plan for full 9 % taxation from the 2027 tax period onward.
Sources and further reading
- Ministerial Decision No. 73 of 2023 — Small Business Relief framework
- FTA Decision No. 3 of 2024 — Mandatory CT registration for all UAE entities
- Federal Decree-Law No. 47 of 2022 — UAE Corporate Tax Law
- UAE Federal Tax Authority — EmaraTax portal and SBR election (tax.gov.ae)