Guide on Small Business Relief under UAE corporate tax

For small business owners in the UAE, tax filing can seem complex following the introduction of UAE corporate tax. The launch of corporate tax in the UAE has increased the need for small businesses to get a clear idea of the preparation and filing of tax. Regardless of the business model- whether a freelancer or a startup, proper guidance on how to file a small business tax return is key to preventing mistakes and ensuring compliance.

Recognizing the challenges small businesses may face under the UAE corporate tax regime, the UAE government issued Small Business Relief (SBR) as a part of Ministerial Decision No. 73 of 2023. This provision is designed to lower corporate tax burden for qualifying small businesses in the UAE, allowing them to retain cash flow and reinvest profits and support sustainable growth while staying compliant with UAE corporate tax regulations.

This article will guide you throughout the entire process of small business relief under the UAE corporate tax regime in 2026, covering eligibility criteria, compliance requirements, documentation, and filing obligations for small businesses.

What is Small Business Relief under UAE Corporate tax?

Small Business Relief is a key feature of UAE corporate tax aimed at supporting businesses earning below the defined revenue threshold. Qualifying entities are treated as having zero taxable income, thereby eliminating corporate tax liability for the relevant period.

While small business relief lowers corporate tax payable, eligible businesses are still required to meet corporate tax filing and reporting obligations in the UAE. By simplifying administrative burden, this initiative helps small businesses and entrepreneurs transition smoothly into the UAE corporate tax regime with confidence.

With SBR and seamless guidance from Jaxa, small business owners can focus on growth and business operation, knowing that their UAE corporate tax compliance and return filing requirements are properly managed.

Who is eligible for Small Business Relief under the UAE corporate tax?

To be eligible for SBR under the UAE corporate tax law, one must meet the following criteria:

1. Revenue threshold requirement:

• The annual revenue must not exceed AED 3 million for the relevant tax period.
• The revenue must remain equal to or below AED 3 million for all previous tax period ends or before 31st December 2026.
• In case a revenue exceeds AED 3 million in any of the tax periods, the business becomes ineligible for SBR, even if revenue falls below the threshold in subsequent years.

2. Resident Status:

   To qualify for SBR, the business must be a UAE resident.

This includes:

• Individuals conducting business in the UAE
• Companies incorporated in the UAE
• Resident Free Zone entities
• Foreign companies with management and control located in the UAE, i.e., deemed residents.

3. Election for SBR in Tax Return:

• The business must elect the SBR while filing its UAE corporate tax return, as the SBR is not automatic
• If the SBR is not selected during corporate tax return filing, the relief cannot be claimed for that period.
• Filing obligation remains mandatory, even if no tax is payable under SBR.
• Even if the business has 0 corporate tax payable under SBR, corporate tax filing remains mandatory.

4. Maintain proper records:

   To qualify for Small Business Relief, your business must be registered for UAE corporate tax and receive a TRN. Proper Documentation is mandatory in case the corporate tax payable is zero, as it is necessary for UAE FTA audits or scrutiny.

Who cannot claim small business relief in the UAE?

Even though Small Business Relief (SBR) is designed to help smaller UAE businesses, certain entities are excluded:

• Multinational Enterprise(MNEs): Multinational groups with total consolidated revenue exceeding AED 3.15 are not eligible. These large groups are assumed to have sufficient resources to handle UAE corporate tax obligations.
• Qualifying Free Zone Entities: The business with qualifying free zone status with 0% UAE corporate tax on qualifying income cannot claim SBR.

Small Business Relief Compliance Checklist under UAE corporate tax

Small business relief offers easier tax compliance for qualifying businesses. Here’s what to keep in mind:

1. Maintain detailed financial records:

• Record all invoices, payments, and financial statements to validate SBR eligibility.
• Keep documents easily accessible for FTA audit or scrutiny.
• Proper documentation ensures compliance with UAE corporate tax.

2. Document retention: As SBR eases compliance, maintaining records for at least 7 years is required as perthe  UAE Corporate Tax Law and for UAE accounting and audit requirements.

3. Filing obligation:

   Filing a UAE corporate tax return is mandatory for all eligible small businesses, regardless of whether tax is owed.

4. SBR Election requirement:

• Businesses must declare their SBR election while filing their corporate tax return
• Missing the elections means business cannot apply for relief for that year.
• Non- filing to UAE corporate tax may lead to FTA penalties and compliance risk.

5. Compliance with accounting standards:

• Revenue figures must be precise, documented, and audited to support eligibility for Small Business Relief
• Ensure proper reporting to confirm accuracy, transparency, and audit readiness.

Why Small Business Relief Matters for UAE Businesses

The key benefits for eligible small businesses in the UAE for Small Business Relief under the UAE corporate tax

• Lower corporate tax liability: Eligible businesses benefit from 0% corporate tax rate for the relevant tax period, provided the small business relief conditions are met.
• Simplified tax compliance: SBR streamlines corporate tax compliance in the UAE by minimizing reporting obligations and simplifying the corporate tax filing process for eligible small businesses.
• Better cash flow: The tax savings achieved through SBR may be utilized to strengthen cash flow, fund business expansion plans, or maintain operational stability.
• Lower administrative cost: Businesses claiming SBR under UAE Corporate tax can benefit from streamlined record keeping and prepare financial statements on a cash basis, provided eligibility conditions are met.

Claim Small Business Relief in the UAE with Jaxa’s Expertise

Jaxa Chartered Accountings is a trusted accounting and auditing firm in the UAE with extensive experience as a UAE FTA tax agent and corporate tax compliance. Our team of immensely qualified corporate tax consultants in the UAE assists small businesses in understanding,  navigating, and applying for the small business relief efficiently and without hassle.

Our services include:

• Eligibility Assessment for Small Business Relief
• Documentation Preparation & Filing
• 100% compliance assurance
• UAE corporate tax filing and submission
• Assistance from the UAE FTA tax agent

Our team of tax consultants in the UAE helps small businesses to plan taxes strategically while staying compliant with UAE corporate tax regulations. With Jaxa managing your SBR and corporate tax obligations, you can focus on scaling your business with confidence.

Secure Your Small Business Tax Relief with Jaxa Auditors.