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Take advantage of UAE’s Small Business Relief program — businesses with annual revenue up to AED 3 million may pay 0% corporate tax for eligible tax periods. We guide you through eligibility, election, and filing so you benefit while staying fully compliant.
In June 2023, the UAE introduced Corporate Tax to diversify its economy and align with international tax practices. This progressive tax framework ensures fairness while fostering an environment conducive to growth. For small businesses, it may seem challenging, but there are relief programs to make it easier. This blog sheds light on the Corporate Tax structure and introduces Small Business Relief as a cornerstone for supporting SMEs in the UAE.
Corporate Tax in the UAE applies to net income generated by businesses, emphasizing transparency and accountability. The current tax rate is set at 9% for taxable income exceeding AED 375,000, while income below this threshold remains tax-free. This dual-rate system ensures minimal impact on smaller enterprises, aligning with the UAE’s commitment to fostering business growth.
Key Features of UAE Corporate Tax:
Recognizing the vital role small and medium enterprises (SMEs) play in economic development, the UAE government has introduced Small Business Relief as part of its Corporate Tax framework. This initiative is designed to:
Small Business Relief is available to SMEs with annual revenue below AED 3 million, ensuring that only genuinely small businesses meeting this specific criterion can benefit from the initiative.
Taxable persons eligible for and election made for Small Business Relief can benefit from:
Tax Losses during the tax period in which taxable person has elected for small business relief, the taxable person will not be able to accrue, utilize or transfer tax losses of that period.
Tax losses of previous tax period can be carried forward to future tax period in which Small business relief is not elected or applicable.
Certain businesses and scenarios fall outside the scope of Small Business Relief, including:
Let Virtual Accountants handle the numbers—so you can focus on what you do best: growing your business.
Taxable persons electing for Small Business Relief must meet the following requirements:
In a competitive marketplace, Small Business Relief provides a safety net for entrepreneurs striving to establish and expand their ventures. Here’s how it benefits SMEs:
At Virtual Accountants LLC, we specialize in helping SMEs navigate the complexities of Corporate Tax and Small Business Relief. Our services include:
The introduction of Corporate Tax in the UAE, paired with Small Business Relief, reflects the government’s dedication to creating an equitable and thriving business environment. By leveraging these measures, small businesses can achieve greater financial resilience and unlock new opportunities for growth. Connect with Virtual Accountants LLC to ensure you’re making the most of the relief options available.
We’re always on the same page with Government Agencies, working together to get the job done!
We’re always on the same page with Government Agencies, working together to get the job done!
Small Business Relief is available to UAE companies and residents with revenues below the FTA’s threshold (currently AED 3 million). To qualify, the business must be properly registered for corporate tax and meet the eligibility criteria set by the Federal Tax Authority (FTA). If revenue crosses the threshold, the relief no longer applies.
Yes, Free Zone companies can apply for Small Business Relief, but only if their revenue stays under the set limit and they don’t carry out activities restricted under Free Zone corporate tax rules. If they earn mainland income, they must carefully review FTA guidelines to avoid losing their Free Zone benefits.
Yes. Even if a company qualifies for Small Business Relief, it must still submit a corporate tax return each year. The benefit is that no tax is due if the revenue stays within the threshold, but reporting remains mandatory to stay compliant with FTA rules.
If your revenue crosses the threshold during a financial year, Small Business Relief no longer applies for that tax period. The company must calculate and pay corporate tax on its profits as per standard rules from that period onward.
Businesses that claim Small Business Relief cannot carry forward tax losses or excess credits to future years. Once the company outgrows the relief and starts paying corporate tax, it can then use loss carryforwards as allowed under UAE tax law.
Incorrect claims can lead to administrative penalties, reassessment of unpaid taxes, and in some cases, suspension of tax registration. The FTA may also impose fines if records do not support eligibility. It is critical to keep accurate books and review relief rules before applying.
Yes, but the FTA considers the total combined revenue of all branches and group entities. If the consolidated revenue exceeds the AED 3 million threshold, the business group cannot benefit from the relief, even if one branch earns less.
Foreign-owned companies can qualify if they are registered in the UAE, operate within the country, and meet the revenue threshold. However, they must not be part of a multinational group that exceeds global revenue thresholds defined under UAE tax rules.
Companies must maintain detailed accounting records, invoices, bank statements, and revenue reconciliations. The FTA can request these documents during audits to verify eligibility. Without proper records, a business risks losing its relief claim and facing penalties.
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