UAE · Guide
UAE Small Business Relief: how to pay 0% corporate tax legally
Small Business Relief and the AED 375,000 threshold: who qualifies, worked tax examples, filing deadlines and the extension of the relief to 2029.
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- Globexpat Team
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#Taxes#Company#Reporting
A small company in the UAE can legally pay 0% corporate tax in two ways. The first is Small Business Relief (SBR), a relief for companies with revenue of no more than AED 3 million per year. If you elect it in your return, the company is treated as having no taxable profit at all, however much it earned. The second is the 0% rate on the first AED 375,000 of profit, which is available to every taxpayer without exception.
These are two different mechanisms, and they are often confused. SBR looks at revenue (turnover), while the AED 375,000 threshold looks at profit. A company with AED 2.5 million in turnover and AED 1 million in profit pays 0% only thanks to SBR. A company with AED 5 million in turnover and AED 300,000 in profit pays 0% only thanks to the AED 375,000 threshold.
This article is about practice: who really qualifies for the relief, how to calculate the tax and where companies lose the right to 0%. For help with registration, returns and bookkeeping, see our accounting in the UAE page.
Two ways to pay zero tax
| Point | Small Business Relief | 0% rate up to AED 375,000 |
|---|---|---|
| What it looks at | Revenue for the tax period | Taxable profit |
| Threshold | Up to AED 3,000,000 in revenue | First AED 375,000 of profit |
| How it applies | Election in the tax return | Automatically |
| Tax | 0% on all profit | 0% up to AED 375,000, 9% above |
| Not available to | QFZPs, members of MNE groups with revenue above AED 3.15 billion | Available to all, except QFZPs on qualifying income (they have their own regime) |
| Validity | Tax periods ending no later than 31.12.2029 | No end date |
Legal basis: Ministerial Decision No. 73 of 2023 (SBR conditions), Ministerial Decision No. 131 of 2026 (extension to 2029), Cabinet Decision No. 116 of 2022 (AED 375,000 threshold).
Who can claim Small Business Relief
The relief is available to a UAE resident, whether a company or an individual carrying on a business, if revenue does not exceed AED 3 million in the current tax period and in every previous one. The last condition matters: if revenue was AED 3.2 million in 2025, you cannot return to SBR in 2026, even if turnover falls to AED 1 million.
Who cannot claim SBR:
- a Qualifying Free Zone Person, that is, a free zone company that has claimed 0% on qualifying income. It has to choose one regime. We cover it in detail in Qualifying Free Zone Person.
- Companies in multinational groups with consolidated revenue above AED 3.15 billion.
- A business artificially split into several legal entities so that each stays under AED 3 million. The FTA can treat such splitting as abuse, deny the relief and recalculate the tax.
Worked examples
Below are four typical situations we see with clients. Tax is calculated at 9% on profit above AED 375,000.
| Example | Revenue, AED | Profit, AED | Tax without SBR, AED | Tax with SBR, AED |
|---|---|---|---|---|
| IT consulting, one owner | 1,800,000 | 1,200,000 | 74,250 | 0 |
| Trading company | 2,900,000 | 450,000 | 6,750 | 0 |
| Agency with turnover above the threshold | 3,400,000 | 900,000 | 47,250 | not available |
| Small service business | 900,000 | 250,000 | 0 | 0 |
How to read the table. In the first example SBR saves AED 74,250 a year: (1,200,000 − 375,000) × 9%. In the third example revenue exceeded AED 3 million, so the relief is closed and the company pays 9% on everything above AED 375,000. In the fourth example profit is already below AED 375,000, so electing SBR does not change the tax, but it does simplify reporting.
When electing SBR does not pay
The relief is not free: in the years you use it, the company does not build up tax losses to carry forward. If you make a loss of AED 300,000 in year one, and in year two you make AED 1 million of profit with revenue already above AED 3 million, the carried-forward loss would have reduced your year-two tax. By electing SBR in year one, you lose that loss.
The practical rule we use:
- The company is profitable and revenue is consistently below AED 3 million: we elect SBR.
- The company makes a loss in its launch year and expects to grow quickly above AED 3 million: we calculate both options before filing.
- Revenue is close to AED 3 million: we track turnover monthly, because exceeding it in a single year closes the relief for good.
What SBR does not change
Even with the relief, the company remains a taxpayer. Its obligations stay in place:
| Obligation | Deadline | Penalty for breach |
|---|---|---|
| FTA registration (EmaraTax) | 3 months from the license issue date for new companies | AED 10,000 |
| Corporate tax return | 9 months after the end of the financial year | AED 500 per month for the first 12 months, then AED 1,000 per month* |
| Record keeping | 7 years | from AED 10,000* |
| Financial statements | Annually | Audit required for revenue above AED 50 million or for QFZPs |
* Amounts under Cabinet Decision No. 75 of 2023, as of October 2026, check on tax.gov.ae.
Companies with revenue up to AED 3 million can keep books on a cash basis, and transfer pricing documentation (master file, local file) is not prepared under SBR. But transactions with related parties (for example, with the owner) must still be on arm's length terms.
The FTA waives the AED 10,000 late registration penalty automatically if the company files its first return within 7 months of the end of its first tax period. This is a one-off measure for the first period, and it is worth using if you missed the registration deadline.
Return deadlines: a calendar
If the financial year matches the calendar year, the deadlines look like this:
| Tax period | SBR available | Deadline for return and payment |
|---|---|---|
| 2025 | Yes | 30 September 2026 |
| 2026 | Yes | 30 September 2027 |
| 2027 | Yes | 30 September 2028 |
| 2028 | Yes | 30 September 2029 |
| 2029 | Yes | 30 September 2030 |
| 2030 | Not under current rules | 30 September 2031 |
The return is filed through EmaraTax. The relief is elected with a tick box in the return itself, with no separate application. If you do not elect it, the FTA calculates tax under the general rules.
What changed in 2026
- Extension to 2029. On 7 August 2026 the UAE Ministry of Finance announced Ministerial Decision No. 131 of 2026: SBR applies to tax periods ending no later than 31 December 2029. Previously the relief was due to end in 2026. The AED 3 million threshold has not changed.
- New late payment rules. From 14 April 2026, under Cabinet Decision No. 129 of 2025, late payment penalties on VAT are calculated at 14% per year. The same logic already applied to corporate tax.
- E-invoicing. From 2027 the UAE is introducing mandatory e-invoicing for B2B and B2G transactions. Companies with revenue below AED 50 million need to switch by 1 July 2027. More in UAE VAT at 5%.
Read more: UAE rule changes in 2026: a digest.
FAQ
Do I need to register with the FTA if revenue is small?
Yes. Registration is mandatory for all companies, including free zone companies and companies with no turnover. SBR is only applied through a filed return, and you cannot file one without registering.
Is SBR applied per company or per owner?
Per taxpayer, meaning each legal entity separately. But if the owner has split one business into several companies so that each stays under AED 3 million, the FTA can treat this as artificial separation and deny the relief to all of them.
Can I combine SBR with QFZP status?
No. A free zone company chooses: either 0% on qualifying income under the QFZP rules with a mandatory audit, or SBR. For a small company with revenue up to AED 3 million, SBR is usually simpler and cheaper to maintain.
What happens after 2029?
Under current rules the relief will end, and companies will move to the general regime: 0% up to AED 375,000 of profit and 9% above. The Ministry has already extended the relief once, so the decision may change. We follow updates and alert our accounting clients.
Do I need an audit under SBR?
As a general rule no, if revenue is below AED 50 million and the company is not a QFZP. However, some free zones require audited financial statements to renew the license regardless of the tax regime. Check this in advance, especially when choosing a free zone company.
Sources
- Federal Tax Authority, Corporate Tax and Small Business Relief: tax.gov.ae
- UAE Ministry of Finance, Ministerial Decision No. 73 of 2023 and No. 131 of 2026: mof.gov.ae
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses: uaelegislation.gov.ae
- UAE government portal, corporate tax section: u.ae