UAE Small Business Relief 2026: CT Exemption Under AED 3M | Paci
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UAE small business relief 2026: CT exemption for SMEs under AED 3 million.

UAE Small Business Relief allows businesses with revenue below AED 3 million to elect 0% Corporate Tax for eligible tax periods — but the relief has conditions, elections are required, and it sunsets for periods ending after 31 December 2026.

TH
Treasury & Working Capital Advisor · Paci Finance
Updated 9 min read Verified to 2026 sources
UAE small business owner reviewing corporate tax relief eligibility documents
UAE Small Business Relief 2026: businesses with revenue under AED 3 million can elect 0% CT — but the relief has conditions and expires after 31 December 2026 tax periods
Quick answer

UAE Small Business Relief (Ministerial Decision 73/2023): businesses with revenue under AED 3 million in the tax period can elect 0% CT. Must be elected on EmaraTax — not automatic. Exclusions: QFZPs, members of multinational groups (CbCR filers), and businesses that artificially split to stay under AED 3M. Sunset: relief unavailable for tax periods ending after 31 December 2026. Plan your CT transition now.

AED 3M
Revenue threshold for Small Business Relief eligibility
0%
CT rate for eligible businesses electing Small Business Relief
31 Dec 2026
Last tax period end date eligible for Small Business Relief
Election
Must be elected on EmaraTax — not automatic

Who qualifies for UAE Small Business Relief

  • Revenue below AED 3 million: The business’s total revenue (from all sources, in UAE dirhams) for the tax period must be AED 3 million or less. Revenue is the gross amount — not net profit. If you are close to the threshold, the FTA will look at whether revenue has been artificially split or deferred.
  • Not a QFZP: Qualifying Free Zone Persons are not eligible for Small Business Relief — they have their own 0% regime on qualifying income. If your business qualifies as a QFZP, elect QFZP status instead.
  • Not part of a multinational group (CbCR filing group): Entities that are constituent members of MNE groups required to file Country-by-Country Reports (revenue above AED 3.15B group-wide) are excluded.
  • Not artificially fragmented: If the FTA determines that a business has been split into multiple entities purely to stay below the AED 3M threshold, it can treat the entities as a single taxable person. Genuine separate businesses are fine.

How to elect Small Business Relief

  • File on EmaraTax: Small Business Relief is not automatic — the business must elect it on the CT return on EmaraTax. The election is made on the CT return for the relevant tax period. If you do not elect, you are taxed at the standard CT rate (9% above AED 375K).
  • Annual election: The election can be made for each tax period — it is not a permanent election. A business that grows above AED 3M in a year simply does not elect for that year and is taxed at the standard rate.
  • Records still required: Even if you elect Small Business Relief, you must still register for CT on EmaraTax, file a CT return, and maintain proper accounting records (5-year retention). The relief does not exempt you from compliance obligations.
Small Business Relief sunsets after tax periods ending 31 December 2026

The relief is only available for tax periods ending on or before 31 December 2026. A business with a December 31, 2026 financial year end: can still elect SBR for that period. A business with a March 31, 2027 financial year end: cannot elect SBR — the period ends after the sunset date. From 2027, all UAE businesses pay CT at standard rates regardless of size (unless they qualify as a QFZP or have income below the AED 375K threshold, which is still taxed at 0%).

Preparing for the SBR sunset

  • Review your revenue trajectory: If you have been under AED 3M, are you growing? Plan for full CT compliance — CT registration, quarterly or annual CT provisioning, and CT return preparation — for 2027 onwards.
  • Consider QFZP election: If your business is in a free zone and your income is qualifying, QFZP status gives a sustainable 0% CT on qualifying income — no revenue cap, no sunset. The trade-off: full IFRS audit, substance requirements, and de minimis non-qualifying revenue cap.
  • Deductible expense planning: Once you are paying CT at 9%, every deductible expense saves 9 fils on the dirham. Now is the time to document and structure deductible expenses properly (salary, rent, professional fees, depreciation).

Still under AED 3M but planning for CT when SBR sunsets?

We advise on UAE CT transition, QFZP eligibility assessment, and deductible expense planning. Fixed fee.

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Frequently asked questions

Can a UAE business with AED 3.1M revenue elect Small Business Relief?

No — the threshold is strict at AED 3 million. If revenue is AED 3,000,001, the business is not eligible. If you are close to the threshold, review whether any revenue items should be excluded (out-of-scope supplies, VAT amounts, non-UAE-sourced income) — but do not artificially reduce revenue below the threshold, as the FTA can challenge this.

Do I still need to file a CT return if I elect Small Business Relief?

Yes — you must register for CT, file a CT return on EmaraTax, and make the SBR election on the return. Small Business Relief reduces your CT liability to zero — it does not exempt you from the filing obligation. Failure to file the CT return (even with 0% tax due) triggers a late filing penalty: AED 500 per month for the first 12 months, AED 1,000 per month thereafter.

Can a UAE free zone company elect Small Business Relief?

A non-QFZP free zone company with revenue under AED 3M can elect Small Business Relief. A QFZP cannot elect SBR — they have their own 0% regime on qualifying income. If your free zone company meets QFZP conditions, compare both options: QFZP is more sustainable long-term (no revenue cap, no sunset), but has stricter compliance requirements (full IFRS audit, substance).

What happens to my CT return if I used Small Business Relief in 2024 but my revenue exceeds AED 3M in 2025?

For 2024: SBR election is valid if you were eligible. For 2025: you cannot elect SBR — you pay CT at the standard rate (9% above AED 375K). The FTA does not claw back the prior year SBR election. However, ensure your 2024 revenue was genuinely below AED 3M — if the FTA concludes you understated 2024 revenue to qualify, it can reassess and impose penalties.

TH

Tarek Hassan, CFA

Treasury & Working Capital Advisor · Paci Finance

Tarek is a CFA charter-holder with prior treasury and FP&A roles at two UAE-listed groups. At Paci he advises SMEs and high-growth startups on cash-flow forecasting, working-capital cycles, banking relationships and investor reporting.

Small Business Relief sunsets for periods ending after 31 December 2026 — plan now.

We advise UAE SMEs on Small Business Relief eligibility, CT elections, and the transition to the full CT regime. Fixed fee.

Official UAE Government Sources