UAE Corporate Tax Small Business Relief: Eligibility and How to Claim It

Small Business Relief is an election available under the UAE Corporate Tax Law that allows eligible resident businesses below a certain revenue threshold to be treated as having no taxable income for a given tax period, effectively removing the compliance burden of calculating and paying corporate tax while the business remains under that threshold.

To qualify, a business's revenue for the relevant tax period, and generally for prior periods being assessed, must fall below the threshold set out in the relevant Ministerial Decision, which has historically been set at AED 3 million. The relief is only available to UAE resident juridical persons and does not apply to certain categories, including Qualifying Free Zone Persons benefiting from the free zone tax regime and members of Multinational Enterprise Groups meeting specific consolidated revenue thresholds.

Claiming the relief is an election made through the corporate tax return rather than something granted automatically, meaning eligible businesses still need to register for corporate tax and file a return, but can elect to treat their taxable income as nil for that period. Importantly, revenue for the threshold test is generally assessed based on the applicable accounting standards' definition of revenue, not net profit, so a business with thin margins but revenue above the threshold would not qualify even if actual taxable profit were small.

Because Small Business Relief has time-limited availability under current legislation and specific anti-abuse provisions apply if a business artificially splits operations to stay under the threshold, businesses relying on this relief should keep it under regular review rather than assuming eligibility continues unchanged year over year. Confirming current thresholds and eligibility criteria with the Federal Tax Authority or a tax advisor before filing is strongly recommended given how frequently these figures are reviewed.