UAE Corporate Tax Small Business Relief 2026 — Complete Guide
Small Business Relief (SBR) is one of the most important UAE Corporate Tax (CT) provisions for small UAE free zone companies. It allows eligible businesses to treat their taxable income as zero for CT purposes. Here is the complete 2026 guide.
What is UAE Small Business Relief?
Small Business Relief (SBR) was introduced alongside UAE Corporate Tax (effective June 2023). Under Ministerial Decision No. 73 of 2023, a qualifying UAE business can elect to be treated as having zero taxable income for a tax period, effectively paying zero UAE Corporate Tax regardless of actual profits.
Who Qualifies for Small Business Relief?
To qualify for Small Business Relief in UAE, all of the following conditions must be met:
- Revenue threshold: Revenue for the tax period must not exceed AED 3,000,000 (approx. USD 820,000)
- UAE resident: The entity must be a UAE resident person (includes UAE mainland companies and most UAE free zone companies that are not Qualifying Free Zone Persons)
- Tax period: The relief is available for tax periods ending on or before 31 December 2026
- No part of a large group: The entity must not be a member of a Multinational Enterprise (MNE) group with consolidated group revenue exceeding AED 3.15 billion (the Pillar Two threshold)
Important: UAE Free Zone Companies and Small Business Relief
This is where it gets complicated. There are two categories:
Qualifying Free Zone Persons (QFZPs)
UAE free zone companies that meet the criteria to be a Qualifying Free Zone Person are already subject to 0% CT on qualifying income. They do NOT need Small Business Relief because their qualifying income is already 0% taxed. However, if they have non-qualifying income exceeding AED 375,000, they may face 9% CT on that excess.
Non-Qualifying Free Zone Persons
Free zone companies that do not meet QFZP criteria are subject to 9% CT on taxable income exceeding AED 375,000. For these companies with revenue under AED 3M, SBR provides an election to zero out their taxable income.
How to Elect for Small Business Relief
- File your UAE Corporate Tax return (CT return) with the Federal Tax Authority (FTA)
- Elect Small Business Relief on the CT return form
- Keep records demonstrating revenue did not exceed AED 3,000,000
Note: SBR is an election — it is not automatic. You must actively elect it when filing your CT return.
Small Business Relief vs 0% CT Threshold
All UAE businesses (including free zone companies) enjoy a 0% CT rate on taxable income up to AED 375,000. Small Business Relief is different — it applies to the entire taxable income (as long as revenue is under AED 3M), regardless of whether profits exceed AED 375,000.
Frequently Asked Questions
If I elect Small Business Relief, do I still need to file a CT return?
Yes. Electing Small Business Relief does not exempt you from the UAE Corporate Tax filing obligation. You must still register with the FTA, file a CT return, and elect SBR on that return. SBR reduces your tax liability to zero — it does not eliminate the filing requirement.
Is Small Business Relief available for tax periods after December 2026?
Currently, Small Business Relief is available for tax periods ending on or before 31 December 2026. The UAE government may extend this relief beyond 2026, but no extension has been announced as of mid-2026. Check with the Federal Tax Authority (FTA) for the latest status.