Last updated: October 2026

A UAE company with Revenue below AED 3,000,000 in the current Tax Period does not automatically qualify for Small Business Relief (SBR). Before filing, it still has to answer four questions: who is the taxable person, whether Revenue exceeded the threshold in an earlier relevant Tax Period, how Revenue should be recognised, and whether an exclusion applies.

If Revenue exceeded the threshold in any relevant Tax Period during the statutory relief period, a later decline does not restore eligibility. Proceeds from selling business assets or part of a business also cannot be removed from the calculation simply because the transaction was one-off or outside the company’s main activities.

Confirm resident taxable status before testing the AED 3,000,000 threshold

SBR is available only to an eligible Resident Taxable Person. A small operation, a UAE licence, or a UAE residence visa does not by itself establish that status. The review must distinguish a juridical person from a natural person, then confirm the person’s status as both a Taxable Person and a Resident Person, subject to the latest official publication.

A natural person faces a separate entry test. Total Turnover from a UAE Business or Business Activities must exceed AED 1,000,000 in a Gregorian calendar year before that business brings the person within the scope of Corporate Tax and an SBR assessment becomes relevant. Turnover of exactly AED 1,000,000 has not exceeded this threshold. Wages, qualifying personal investment income, and qualifying real estate investment income must be separated from taxable business income; adding every receipt in a personal bank account produces the wrong result. (Source: UAE Federal Tax Authority, Corporate Tax Guide for Natural Persons, 2023; subject to the latest official publication.)

The two amounts answer different questions. AED 1,000,000 determines whether a natural person enters the Corporate Tax regime because of their business. AED 3,000,000 determines whether an eligible Resident Taxable Person may elect for SBR. A natural person who has not passed the first test should not be described as avoiding Corporate Tax by electing for SBR, subject to the latest official publication.

The AED 3,000,000 threshold must be checked for every Tax Period

Revenue must be no more than AED 3,000,000 in the current Tax Period and in every earlier relevant Tax Period within the statutory relief period. Revenue equal to AED 3,000,000 remains within the threshold. An average below that amount cannot offset a Tax Period in which Revenue exceeded it. (Source: UAE Federal Tax Authority, Small Business Relief Guide, August 2023; subject to the latest official publication.)

The historical review has a defined starting point. It covers relevant Corporate Tax Tax Periods beginning on or after 1 June 2023; it does not extend to every accounting year since the business was formed. A natural person’s Tax Period must be identified under the rules applicable to natural persons rather than by mechanically applying the first-period dates used for juridical persons. (Source: UAE Federal Tax Authority, Small Business Relief Guide, August 2023; subject to the latest official publication.)

The UAE Ministry of Finance announced an extension on 7 August 2026. Ministerial Decision No. 131 of 2026 extended SBR to subsequent Tax Periods ending on or before 31 December 2029. The boundary is the Tax Period end date: a Tax Period does not qualify merely because it begins in 2029. (Source: UAE Ministry of Finance, August 2026; subject to the latest official publication.)

Example 3 in the FTA guide shows the lasting effect of an earlier breach. A person records Revenue of AED 4,300,000 in the 2025 Tax Period and AED 1,900,000 in the 2026 Tax Period. Because Revenue exceeded the threshold in 2025, that person still cannot elect for SBR in 2026. A later decline changes the scale of the current period; it does not erase the earlier breach. (Source: UAE Federal Tax Authority, Small Business Relief Guide, August 2023; subject to the latest official publication.)

Revenue is not profit, invoicing, or cash received

The SBR test uses Revenue, not profit after costs, invoice totals, or bank receipts. Revenue must be determined under the accounting standards and methods accepted in the UAE. Accrual accounting generally applies; a person that lawfully qualifies for and uses cash-basis accounting follows that method instead. Cash-basis accounting is an accounting treatment, not another relief granted once the SBR conditions are met. (Source: UAE Federal Tax Authority, Small Business Relief Guide, August 2023; subject to the latest official publication.)

Invoices and bank statements remain useful for supporting and reconciling accounting records, but neither can determine the timing and scope of Revenue on its own. Loan principal, capital contributions, and amounts collected on another party’s behalf should not be classified as operating Revenue solely because cash entered the account.

A resident juridical person must include UAE and foreign Revenue for the relevant Tax Period when testing the SBR threshold. A natural person includes foreign income connected with their taxable UAE Business or Business Activities, rather than every item of personal foreign income. (Source: UAE Federal Tax Authority, Small Business Relief Guide, August 2023; subject to the latest official publication.)

A sale of business assets cannot be tested using only the accounting gain

Printed page 24 of the FTA Small Business Relief Guide explains how proceeds from selling business assets or part of a business enter the Revenue calculation; Example 8 begins on printed page 25. The relevant sale proceeds must be included in Revenue for the SBR test. A business cannot exclude them merely because the transaction is one-off, falls outside its main activities, or is recorded as a gain on disposal. It also cannot test the AED 3,000,000 threshold using only the net gain after deducting the asset’s carrying amount. (Source: UAE Federal Tax Authority, Small Business Relief Guide, August 2023; subject to the latest official publication.)

This treatment concerns proceeds from selling business assets or part of a business. Transactions involving complex asset portfolios, purchase-price allocation, or the boundary between a natural person’s personal and business assets require a separate review of the transaction, accounting records, and Corporate Tax treatment. Personal asset transactions should not all be treated in the same way.

Our approach is to reconcile general-ledger Revenue accounts for each Tax Period against contracts, invoices, and bank records, then review foreign income, business asset sales, and other non-core items separately. Bank statements are useful for finding omissions; they should not be used as the SBR Revenue schedule.

Revenue below the threshold does not override the exclusions

A Qualifying Free Zone Person (QFZP) cannot elect for SBR. A Free Zone Person that is not a QFZP should not be excluded merely because it is registered in a free zone, provided it meets the resident status, Revenue, and other conditions. (Source: UAE Federal Tax Authority, Small Business Relief Guide, August 2023; subject to the latest official publication.)

Members of a Multinational Enterprise Group may also fall within the exclusion. The assessment must apply the group definition in Article 1 of Cabinet Resolution No. 44 of 2020. A member of the relevant Multinational Enterprise Group is excluded where the group’s consolidated Revenue in the Financial Year immediately preceding the Reporting Fiscal Year reached or exceeded AED 3.15 billion. (Source: Cabinet Resolution No. 44 of 2020; UAE Federal Tax Authority, Small Business Relief Guide, August 2023; subject to the latest official publication.)

The test is whether the person belongs to a group meeting that statutory definition and Revenue threshold. It does not depend on the UAE member filing the Country-by-Country Report itself. A foreign shareholder, an overseas related party, or cross-border transactions do not by themselves place a business within the exclusion, subject to the latest official publication.

Artificially separating the same business to keep Revenue below the threshold creates anti-abuse risk. Common ownership of several companies is not conclusive on its own. The assessment turns on whether the entities operate independently, whether their transactions have a commercial purpose, and which functions each entity performs, subject to the latest official publication.

SBR requires an election in the current Tax Return

Meeting the status, Revenue, and exclusion tests does not activate the relief automatically. An eligible person must register for Corporate Tax, obtain a Tax Registration Number (TRN), and elect for SBR for the relevant Tax Period in the applicable Tax Return. The relief is neither an exemption from registration nor an exemption from filing. (Source: UAE Federal Tax Authority, Small Business Relief Guide, August 2023; subject to the latest official publication.)

Before filing, review the evidence in this order:

  1. Distinguish a juridical person from a natural person, then confirm taxable and resident status.
  2. For a natural person, test the AED 1,000,000 annual business Turnover entry threshold.
  3. Identify the current Tax Period and every earlier relevant Tax Period within the statutory relief period.
  4. Apply the relevant accounting method to UAE and foreign Revenue, including proceeds from selling business assets or part of a business.
  5. Confirm that Revenue did not exceed AED 3,000,000 in any relevant Tax Period.
  6. Check QFZP status, membership of a statutory Multinational Enterprise Group, and artificial-separation risk.
  7. Make the election in the current Tax Return and retain the records supporting both Revenue and eligibility.

A single figure showing that this year’s turnover is below AED 3,000,000 cannot support the full conclusion. Establish who the taxable person is, which Revenue belongs in the test, and which Tax Periods must be reviewed before deciding whether to elect for SBR. Where foreign income, business asset sales, or multiple entities are involved, align the accounting treatment with the Corporate Tax treatment before filing and refer to the authorities’ latest publications.

Schedule a 30-minute complimentary assessment to review the entity, historical Tax Periods, and Revenue accounts relevant to an SBR decision.

Last updated: October 2026. This content is for informational purposes only and does not constitute legal or tax advice. For professional consultation, please contact the MIRISE team.