Small Business Relief (SBR) is the most valuable corporate tax concession for small UAE businesses. If you qualify and elect it, you are treated as having no taxable income for the period, so you pay no corporate tax, however profitable you are.
The 2029 extension
The relief originally applied to tax periods ending on or before 31 December 2026. In August 2026 the Ministry of Finance extended it to tax periods ending on or before 31 December 2029. The AED 3 million revenue limit did not change.
Who qualifies
You can elect SBR for a tax period if:
- You are a resident person for UAE corporate tax (a UAE company, or a UAE-resident individual running a business).
- Your revenue is AED 3 million or less in that tax period.
- Your revenue was also AED 3 million or less in every previous tax period.
You cannot use SBR if you are:
- a Qualifying Free Zone Person, or
- a member of a multinational group with consolidated revenue above AED 3.15 billion.
The “every previous period” trap
Once your revenue goes over AED 3 million in any tax period, you lose SBR for that period and all later periods, even if revenue falls back under the limit. That makes a single unusual year expensive. Plan large one-off transactions with this in mind.
Revenue, not profit
The test uses revenue: the gross amount of income in your financial statements. A business with AED 2.8 million revenue and AED 900,000 profit qualifies. A business with AED 3.2 million revenue and a small profit does not.
What you still have to do
SBR is not an exemption from the system:
- You must still register for corporate tax.
- You must keep accounting records.
- You must file a tax return for each period, and elect SBR in it.
Missing registration still costs AED 10,000, and late returns still attract penalties.
What you give up by electing
While you use SBR, you cannot carry forward tax losses from that period, and certain other reliefs are not available. For a business that expects losses now and profits later, this can matter. Discuss it with your adviser before electing.
Splitting a business to stay under the limit
The rules contain anti-abuse provisions. Artificially splitting a business into several entities to keep each under AED 3 million can be challenged by the FTA.
Check your position
Enter your revenue and taxable income in the corporate tax calculator to see your tax with and without the relief.
Worked example
A consultancy reports these figures:
| Tax period | Revenue | Eligible for SBR? |
|---|---|---|
| 2024 | AED 2.1 million | Yes |
| 2025 | AED 2.7 million | Yes |
| 2026 | AED 3.4 million | No: over AED 3 million |
| 2027 | AED 2.9 million | No: revenue exceeded the limit in an earlier period |
From 2026 onwards, the consultancy pays tax at 0% and 9% in the normal way, even though revenue fell back in 2027.
Frequently asked questions
Is the AED 3 million test based on revenue for VAT or for accounts?
It is based on revenue as defined for corporate tax, which follows the revenue in your financial statements. It is not the VAT taxable supplies figure.
Can I choose not to elect SBR?
Yes. Electing is optional. Some businesses with losses prefer not to elect, so that the losses can be carried forward.
Does SBR change my VAT obligations?
No. VAT registration and returns are separate.
