UAE Small Business Relief 2026: Who Qualifies and How to Elect
A clear guide to the UAE Small Business Relief for 2026, covering the AED 3 million revenue threshold, how the election works via EmaraTax, trade-offs with losses, and interaction with Qualifying Free Zone Person 0 percent status.
Small Business Relief (SBR) is a UAE Corporate Tax provision that lets small businesses with revenue under AED 3 million per tax period elect to be treated as having no taxable income, effectively paying 0 percent corporate tax for that year. Here is how it works for the 2026 tax year.
Who qualifies
- UAE tax resident companies and natural persons subject to Corporate Tax.
- Revenue for the tax period and the previous tax period both below AED 3 million.
- Not part of a Multinational Enterprise (MNE) Group with consolidated revenue above EUR 750 million.
- Not a Qualifying Free Zone Person already enjoying 0 percent on qualifying income (SBR is designed for mainland businesses primarily).
How much tax does it save
- Without SBR: 9 percent corporate tax on taxable income above AED 375,000.
- With SBR: elected business is treated as having no taxable income; corporate tax due is zero.
- For a mainland LLC with revenue of AED 2 million and profit of AED 500,000, SBR saves (500,000 - 375,000) * 9 percent = AED 11,250 per year.
- For a profit of AED 1 million, SBR saves (1,000,000 - 375,000) * 9 percent = AED 56,250 per year.
How to elect SBR
- Register for UAE Corporate Tax on EmaraTax if not already done.
- Prepare financial statements for the tax period showing revenue under AED 3 million.
- File the Corporate Tax return within 9 months of financial year end.
- On the return, tick the Small Business Relief election box.
- Submit financial statements and keep audit-ready records for 7 years.
Trade-offs: what you give up by electing SBR
- Losses are not deductible: you cannot claim or carry forward tax losses from a year where you elected SBR.
- Interest capping does not apply: net interest expenditure rules do not need application, but neither do deductions.
- Transfer pricing rules relaxed: SBR-elected businesses have lighter TP compliance.
- Not usable alongside Qualifying Free Zone Person 0 percent: QFZP election and SBR are mutually exclusive for the same entity.
SBR versus Qualifying Free Zone Person (QFZP) 0 percent
- SBR: any UAE mainland or non-QFZP free zone business with revenue under AED 3 million. Simpler to qualify, but limited to 2026 year end (unless extended).
- QFZP: free zone entities with qualifying income (serving free zone or non-UAE clients), adequate substance, under 5 percent non-qualifying income, audited accounts and transfer pricing compliance. More conditions, but permanent (not time-boxed).
- For a mainland LLC under AED 3 million revenue, SBR is simpler and gives the same 0 percent outcome.
- For a free zone company serving other free zone businesses or non-UAE clients, QFZP route works and is sustainable past 2026.
Deadline and future
The Small Business Relief regime is currently legislated through tax periods ending on or before 31 December 2026. Industry expectation is that the Ministry of Finance will extend to 2029 or make it permanent for very small businesses, but the extension has not been formally announced as of October 2026. Plan on the current end date unless an extension is confirmed.
If you run a UAE mainland business with revenue below AED 3 million and expect it to stay below AED 3 million through 2026, elect Small Business Relief. The AED 11,250 to AED 56,250 saved covers the audit and compliance cost many times over.
Breeo files UAE Corporate Tax returns including Small Business Relief elections for retainer clients. See our compliance services, or read the full UAE Corporate Tax guide.
Frequently asked questions
What is the revenue threshold for UAE Small Business Relief?
AED 3 million for both the current and the previous tax period. Businesses with revenue consistently under AED 3 million per year qualify.
Is Small Business Relief automatic?
No. It is an election you make when filing your UAE Corporate Tax return via EmaraTax. The election is irreversible for that tax period.
What is the Small Business Relief deadline?
Current legislation covers tax periods ending on or before 31 December 2026. Industry expectation is extension, but not yet confirmed.
Can a Qualifying Free Zone Person also elect SBR?
No. QFZP and SBR are mutually exclusive. QFZP keeps 0 percent on qualifying income permanently; SBR is a simpler alternative for non-QFZP businesses under AED 3 million revenue, limited to the 2026 window.
Do I still need audited accounts if I elect SBR?
Audited accounts are not mandatory for SBR, but you must maintain full financial records for 7 years. Audited accounts become mandatory above AED 50 million revenue regardless of SBR.
