Small Business Relief under Corporate Tax
The introduction of Corporate Tax in the UAE brought a wave of concern for small businesses. However, the government also introduced the Small Business Relief (SBR) program to mitigate this impact.
SBR is a tax exemption program offered by the UAE government to qualifying small businesses. This means that eligible businesses are not required to pay Corporate Tax on their profits.
Who Qualifies for SBR?
Several factors determine your eligibility for SBR. Here’s a quick rundown:
- Revenue Threshold: Your business’s annual revenue must be AED 3 million or less for the relevant tax period and all previous tax periods ending on or before December 31, 2026. This threshold is temporary and may change in the future.
- Business Structure:
- You must be a "Resident Person" for Corporate Tax purposes. This means your business is registered and managed in the UAE mainland.
- You cannot be part of a Multinational Enterprise Group (MNE Group).
- You cannot be a business operating in a Free Zone with a reduced tax rate.
How to Claim SBR?
Claiming SBR is a simple process. You just need to include an election for SBR in your tax return for the respective tax period. There’s no separate application required.
Benefits of SBR
SBR offers significant financial benefits for small businesses:
- Reduced Tax Burden: This exemption frees up capital that can be reinvested in growth initiatives, marketing, or hiring additional staff.
- Simplified Compliance: SBR eliminates the need for complex tax calculations and filings, saving you time and resources.
The current AED 3 million threshold applies until December 31, 2026. It’s advisable to stay updated on any future changes.
SBR applies only to mainland businesses. Free Zone companies with reduced tax rates are not eligible for this specific relief program.
The UAE’s Small Business Relief program is a welcome initiative that recognizes the importance of fostering a vibrant entrepreneurial ecosystem. By understanding the eligibility criteria and claiming SBR if applicable, you can ensure your business thrives under the new Corporate Tax regime.
Have questions about how Corporate Tax provisions apply to your business? Reach out to our team for expert advice.
Team TFAB