Small Business Relief (SBR) is the single most valuable election available to UAE founders today. If your revenue is under AED 3 million, you may pay zero corporate tax, but only if you tick the right boxes and file the election on time.
How SBR actually works
SBR is an election that treats your taxable income as zero for the year, even if your accounting profit is positive. It is not an exemption from filing, you still submit a CT-101 return, but the line for tax payable lands at AED 0. The relief was designed to ease the burden on early-stage and lifestyle businesses while the FTA builds out compliance infrastructure.
It runs through tax periods ending on or before 31 December 2026. The Ministry of Finance has signalled it may extend, but assume the cut-off is firm and plan accordingly. After SBR ends you revert to the standard 0% / 9% brackets.
The eligibility tests
Three tests must all hold true: revenue must be below AED 3,000,000 in the current period and every prior period since June 2023; you must be a UAE resident person (a natural person carrying on a business or a UAE-incorporated entity); and you must not be a Qualifying Free Zone Person or a Multinational Enterprise group member.
Revenue is measured by accounting standards, usually IFRS for SMEs, and it is gross, not net. A consulting firm that bills AED 2.8M and has AED 200K of cost of services is at AED 2.8M revenue, not AED 2.6M, and qualifies. A trading company that bills AED 3.1M qualifies for nothing under SBR even if profit is negative.
How to elect
The election is made annually inside your CT-101 return. There is a single tick-box at the top of the form labelled 'Elect for Small Business Relief.' You also have to attest that revenue is below threshold and provide the underlying figures. The election is for that period only, it has to be re-made each year you qualify.
If you forget to tick it and submit, the FTA treats it as a non-election and you owe full tax. There is a mechanism to amend within 30 days but it is administratively painful. We recommend a calendar reminder 90 days before year-end and a draft return ready 60 days out.
Worked example
Imagine a two-person consultancy in IFZA. Revenue is AED 1.8M, profit is AED 1.3M. Without SBR the tax is (1,300,000 − 375,000) × 9% = AED 83,250. With SBR the tax is zero. The election takes 90 seconds. Even in a dispute scenario, the upside far outweighs the recordkeeping burden.
If the same consultancy grew to AED 3.2M of revenue the next year, SBR would no longer apply and standard CT would kick in for the full profit above AED 375K. That is why SBR is sometimes called a 'soft landing', it gives founders a runway to rebuild margins before facing CT proper.
This guide is general information, not professional advice. For situations that involve specific facts, talk to your accountant, or hire one of ours from the marketplace.