Introduction

Startups and Small and Medium-sized Enterprises (SMEs) are the backbone of the UAE’s economy. The introduction of Corporate Tax raised concerns about compliance costs, but the government introduced measures like Small Business Relief to support entrepreneurs.

In this blog, we explore how the tax applies to small businesses and what relief options exist.

Small Business Relief (SBR)

Available until 31 Dec 2026, this relief allows entities to be treated as having zero taxable income, provided:

• Revenue is less than AED 3 million for the tax period
• They are UAE-resident juridical persons (natural persons excluded)
• Not part of an MNE group or engaged in excluded activities (e.g., banking, insurance)

SBR must be elected in the return annually.

Obligations for SMEs

Even with SBR, SMEs must:

• Register for Corporate Tax
• Maintain accounting records
• File an annual tax return with the election

Failing to do so results in penalties even if no tax is due.

Example

A tech startup earns AED 2.7M revenue in 2025. It files its return and elects Small Business Relief.

• Taxable income: Treated as AED 0
• Tax due: AED 0
• Still required: Filing + record-keeping

Final Thoughts

Corporate Tax doesn’t mean automatic tax for small businesses — but compliance is still essential. Small Business Relief is a lifeline until 2026, so use it wisely.

Need Help Filing SBR Elections?

At Think Biz, we:

• Assist startups with registration and tax planning
• Guide on SBR eligibility and filing
• Maintain audit-ready records

Reach out for startup-friendly tax support.

 

Contact us today for a free consultation.

Contact number: ‪+971 50 983 0334‬

Email ID: info@alphabets.ae