What is Small Business Relief (SBR)?
Small Business Relief is a regime under the UAE’s Corporate Tax Law (Federal Decree-Law No. 47 of 2022) that reduces compliance obligations for smaller enterprises whose revenue does not exceed AED 3 million per tax period. It allows qualifying businesses to elect for relief and enjoy simpler reporting and compliance rules. (mof.gov.ae)
Key Update: Extension Until 31 December 2029
In an announcement dated August 7, 2026, the UAE Ministry of Finance issued Ministerial Decision No. 131, which extends the period during which Small Business Relief can be claimed for tax periods ending on or before 31 December 2029. All other conditions (revenue threshold, eligibility etc.) remain based on prior rules. (mof.gov.ae)
Eligibility Rules and Conditions
To qualify:
- Your annual revenue must not exceed AED 3 million.
- Business must be a Taxable Person under UAE Corporate Tax Law.
- Free Zone entities qualify only if they meet the Qualifying Free Zone Person requirements.
- Entities within Multinational Enterprise (MNE) Groups (as per Cabinet Decision No. 44 of 2020) with consolidated group revenue above AED 3.15 billion do not qualify. (mof.gov.ae)
How to Use SBR to Your Advantage
Here’s how SMEs can make SBR work:
- Calculate projected revenue: ensure that you stay under AED 3 million—cross-business group separations (artificial or real) are assessed by authorities.
- Elect relief properly: you must opt in; if you do not, you’ll be subject to full compliance rules, but you may still carry forward losses.
- Maintain robust records: even under SBR, basic accounting, financial statements, and financial records are required to demonstrate eligibility.
- Plan exit from SBR: once you exceed the threshold, understand when obligations increase—e.g., full filing, loss of simplifications.
Example
“Coffee & Co.” is a sole proprietorship incorporated as a Taxable Person, with revenues of AED 2.4 million in 2025, and not part of any MNE Group. It opts for Small Business Relief in 2025. In 2026, revenues increase to AED 3.2 million. Then:
- “Coffee & Co.” is eligible for SBR in the 2025 period, uses simplified compliance.
- For 2026, it exceeds threshold, so cannot elect SBR and must follow full corporate tax compliance for that period.
- Any tax losses or disallowed interest from periods under SBR may be carried over as per rules.
Strategic Recommendations
- Conservative budgeting: monitor whether your sales or other revenues may breach threshold.
- Group structuring: ensure group-membership is tested properly—if part of MNE, large group revenue might disqualify.
- Track financial period ends and compliance calendar to know when SBR ends for you.
Benefits vs Trade-Offs
| Benefit | Trade-Off/Risk |
|---|---|
| Reduced obligations: simpler returns, fewer disclosures | Potential higher tax / full compliance once cross threshold |
| Lower administrative burden and cost | Need to maintain accurate records regardless |
| Helps cash flow for growing businesses | Exclusion from MNE-large group qualification may bite if group revenue rises |
Author: NomadicTax Research Team
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