Small business relief in the UAE: who qualifies and how to elect it

What is small business relief in the UAE?

Small business relief UAE is an elective corporate tax measure under Ministerial Decision 73 of 2023. Resident taxable persons with revenue of AED 3,000,000 or less in the current and all previous tax periods can be treated as having no taxable income. The election applies for each tax period through December 31, 2026.

The relief sits inside the wider UAE Corporate Tax framework introduced by Federal Decree-Law 47 of 2022. It is designed to lower the compliance load on small companies and sole establishments while the regime beds in. You still register, still file a return, and still keep records, but you do not calculate or pay corporate tax for the period you elect.

The AED 3 million revenue test

The headline rule for UAE small business relief AED 3 million is simple on the surface and strict in detail. Revenue, not profit, is the test. If your gross revenue for the tax period exceeds AED 3,000,000, you cannot elect relief for that period.

The Federal Tax Authority (FTA) also looks backward. You must have been at or below AED 3,000,000 in every previous tax period since the law took effect. One year above the threshold disqualifies you permanently from the relief, even if your revenue later drops.

How revenue is measured

Revenue is measured under accepted accounting standards, typically IFRS or IFRS for SMEs. It includes the gross value of supplies, services, and other income before deducting costs. Capital gains, foreign income, and exempt income are included for the purpose of this test unless excluded by specific guidance.

The 2026 cut-off

The relief is only available for tax periods ending on or before December 31, 2026. After that date, the measure expires unless the Ministry of Finance (MoF) extends it. Businesses formed late in 2024 or 2025 may only get one or two eligible periods before the window closes.

Who qualifies for corporate tax relief for small business

Corporate tax relief small business applies only to resident taxable persons. That covers UAE incorporated companies, branches of UAE entities, and natural persons carrying on a business in the UAE if their turnover passes the AED 1,000,000 personal threshold.

Both mainland and free zone businesses can elect the relief, but free zone entities that want it must give up their qualifying status. The relief and the 0% qualifying free zone person regime cannot be claimed at the same time.

Who is excluded

• Qualifying Free Zone Persons (QFZPs) that elect to keep the 0% qualifying income regime.
• Members of a Multinational Enterprise Group (MNE Group) with consolidated revenue of EUR 750 million or more, the same population covered by the 15% Domestic Minimum Top-up Tax (DMTT) from January 2025.
• Non-resident persons, including foreign companies with a UAE permanent establishment.
• Businesses that have artificially separated activities to stay under the AED 3,000,000 line. The FTA can apply general anti-abuse rules to deny the relief.

Natural persons and freelancers

Individuals carrying on a business in the UAE only enter the corporate tax net when their annual turnover exceeds AED 1,000,000. If they pass that line but stay under AED 3,000,000, they can elect small business relief like any other resident taxable person.

How to elect small business relief on your return

The relief is not automatic. You must tick the election box inside the corporate tax return filed through the FTA EmaraTax portal. The election is made for each tax period separately. You can claim it one year and skip it the next, as long as you still meet the revenue test.

1. Register for corporate tax and obtain your Tax Registration Number (TRN).
2. Prepare financial statements for the period using accepted accounting standards.
3. Confirm revenue is AED 3,000,000 or less, both this period and every prior period.
4. File the corporate tax return within 9 months of your financial year end.
5. Select the small business relief election inside the return.
6. Keep records for 7 years in case of FTA review.

Filing is still mandatory even when you elect relief. Missing the window can trigger penalties under the tax procedures law. For more on dates and submission rules, see our guide to filing deadlines.

What you give up when you elect ministerial decision 73 relief

Ministerial Decision 73 of 2023 sets the conditions, and the trade-offs matter. Treating revenue as producing no taxable income is useful, but it switches off several other parts of the corporate tax law for that period.

No tax losses carried forward

Any tax loss generated in a period where you elect the relief cannot be carried forward to a future tax period. If your business is investing heavily and expects a loss, the relief may cost you more than it saves. Without the election, that loss could offset up to 75% of taxable income in later, more profitable years.

No interest expenditure carry-forward

Net interest expenditure that would normally be carried forward under the general interest deduction limitation rule is also lost for the period under relief. Capital-intensive businesses with high financing costs should model both paths before electing.

Limited interaction with other reliefs

You cannot combine small business relief with qualifying free zone treatment or with most group reliefs such as tax group consolidation, business restructuring relief, or qualifying group transfers. If your structure relies on group treatment, electing the relief may break it.

Simplified, not zero, compliance

The relief lowers the calculation burden but does not remove your duty to register, file, and keep records. You also remain subject to transfer pricing documentation rules where they apply, although the FTA has signalled lighter expectations for small electors.

Planning for life after the relief

The relief expires for tax periods ending after December 31, 2026. From the following period, every taxable person inside the standard regime pays 0% on taxable income up to AED 375,000 and 9% on the excess. Large multinationals fall under the 15% DMTT.

If you are close to the AED 3,000,000 line, decide early whether crossing it is worth it. Crossing in 2024 or 2025 ends future eligibility. A one-off contract that pushes revenue above the threshold can cost more in lost relief than it brings in.

Track revenue monthly

Build a simple revenue tracker that totals invoices issued and other income. Review it monthly rather than at year end. You can then time discretionary income, such as asset sales, to keep within the threshold if relief is still your best option.

Get your invoicing ready for 2027

The UAE e-invoicing mandate begins on January 1, 2027 for businesses with revenue at or above AED 50,000,000, with the small and medium enterprise (SME) wave on July 1, 2027. Even relief electors should prepare. The model uses Peppol 5-corner DCTCE (Decentralized Continuous Transaction Control and Exchange) with the PINT AE format, exchanged through an accredited service provider (ASP) listed on the Ministry of Finance portal.

Model both scenarios before you elect

Compare two forecasts side by side. One uses small business relief and gives up loss and interest carry-forward. The other pays 0% up to AED 375,000 and 9% above, but preserves losses for future use. Cross-check the result against the published corporate tax rates and your expected profit path. The choice that wins in year one is not always the choice that wins over three years.

For the underlying law, see the Federal Tax Authority page on small business relief and the official Ministerial Decision 73 of 2023. The broader UAE Corporate Tax hub on this site collects rates, deadlines, and reliefs in one place.

Get pricing for UAE e-invoicing

Small business relief covers your corporate tax position through 2026, but UAE e-invoicing arrives on top of it. EInvoice Direct is built for UAE companies and includes an accredited service provider with the software at no extra charge. To get UAE e-invoicing pricing for your business size, send your details and we will share a quote.