UAE Small Business Relief: What You Need to Know
The UAE Ministry of Finance has introduced Small Business Relief via Ministerial Decision No. 73 of 2023 under Federal Decree-Law No. 47 of 2022 (Corporate Tax Law), aimed at supporting startups, micro, and small businesses by easing their corporate tax burden and reducing compliance costs.
✅ Key Details & Eligibility
- The relief applies to “resident persons” whose revenue in both the relevant and previous tax period does not exceed AED 3 million.
- It is valid for financial years starting on or after 1 June 2023 and ending on or before 31 December 2026.
- Businesses that cross the AED 3 million revenue threshold in any eligible tax period will no longer be eligible for the relief.
⚠️ What’s Excluded / Special Conditions
- Free Zone entities (even if they qualify under other rules) cannot benefit if they are Qualifying Free Zone Persons.
- Multinational Enterprise (MNE) groups, specifically those with consolidated revenues over AED 3.15 billion, are excluded.
- If a business does not elect to apply for the relief in a period, it may still carry forward any tax losses or disallowed net interest expenditure for future use when they aren’t applying the relief.
- To prevent abuse, businesses artificially splitting their operations to stay under the AED 3M threshold may be subject to general anti-abuse rules under Article 50 of the Corporate Tax Law.
💡 What This Means for Your Business
If you run a small or micro business in the UAE:
- Check whether your revenue is below AED 3 million now and in the previous tax period.
- If so, you can elect for Small Business Relief, which essentially means being treated as if you did not derive any taxable income in that period, reducing both tax liability and compliance burden.
- Understand that this relief is temporary (ends end-2026), so plan accordingly.
- Make sure your business structure doesn’t unintentionally disqualify you (e.g. via being part of an MNE group or free zone entity).
✍️ Final Thoughts
UAE’s Small Business Relief is a strong incentive for smaller businesses to thrive under the new corporate tax regime. It lowers the barrier for compliance and helps manage costs. Businesses that meet the criteria should seriously consider making use of this relief.
If you’re unsure whether your business qualifies or need help with the election & documentation, EMC can guide you through the process.