Small Business Relief Election for Corporate Tax in the UAE

Fazil

March 19, 2025

Tax in UAE

Navigating corporate tax in the UAE can be overwhelming for small businesses. To ease the burden, the UAE government has introduced Small Business Relief, providing eligible businesses with tax benefits. This blog explains everything you need to know about electing for Small Business Relief, including eligibility, conditions, and restrictions.

Small business relief option initially announced for the Tax Periods

beginning on or after 1 June 2023 and ending on or before 31 December 2026

What is Small Business Relief?

Small Business Relief is a provision under the UAE Corporate Tax Law that allows qualifying businesses to benefit from simplified tax obligations. It is designed to support resident businesses by reducing administrative and financial tax burdens.

Who Can Elect for Small Business Relief?

If you are a resident person operating a small business, you may be eligible to elect for Small Business Relief. This relief aims to help local businesses thrive by easing compliance requirements.

Conditions for Electing Small Business Relief

To qualify for Small Business Relief, businesses must meet the following criteria:

Corporate Tax Registration – Only businesses registered with the Federal Tax Authority (FTA) are eligible.
Revenue Threshold – The business must have revenue of AED 3,000,000 or less in the current and all previous tax periods.
Election for Each Tax Period – The relief is not granted automatically; businesses must apply for it each tax period they wish to claim.
Resident Business Status – Only businesses registered and operating within the UAE as resident entities are eligible.

Who Cannot Elect for Small Business Relief?

Not all businesses qualify for Small Business Relief. The following entities are excluded:

Qualifying Free Zone Persons – Businesses operating under a qualifying free zone status in the UAE cannot claim Small Business Relief.
Multinational Group Members – Businesses that are part of a multinational enterprise (MNE) group with consolidated global revenues exceeding AED 3.15 billion are not eligible.
Artificial Business Separation – Entities that deliberately split their business into multiple entities to qualify for Small Business Relief will be disqualified.

Why Opt for Small Business Relief?

Electing for Small Business Relief can offer several advantages, such as:

Zero Tax Liability: Eligible businesses may benefit from corporate tax payments.
Simplified Compliance: Businesses can avoid complex tax filing procedures, saving time and effort.
Encouraging Growth: Small businesses can reinvest savings into expansion and development.

How to Apply for Small Business Relief

To elect for Small Business Relief, businesses must:

Assess Eligibility: Ensure your business meets the conditions.
Submit the Election: File the request through the UAE Federal Tax Authority (FTA) portal.
Maintain Records: Keep financial and tax documents updated for compliance.

Small Business Relief in the UAE provides significant benefits to eligible businesses, enabling them to manage corporate tax efficiently. However, businesses must assess their eligibility carefully and apply accordingly.

Resident businesses qualifying for Small Business Relief but incurring a loss in the current tax period can still submit a complete tax return. This allows them to carry forward tax losses to future tax periods, ensuring better tax planning and financial stability.

For expert guidance on corporate tax in the UAE, including Small Business Relief election, contact Gateway Accounting today!

Tag Post :

Contact Us for Expert Tax Support!

Don’t wait until the deadline—contact Gateway Accounting today for expert tax support and seamless compliance!