In Brief

1. Small Business Relief (SBR) under Article 21 of Federal Decree-Law No. 47 of 2022 allows qualifying UAE resident businesses to elect a 0% tax rate on revenue up to AED 3 million — but it must be actively elected on the annual EmaraTax return.
2. SBR is incompatible with Qualifying Free Zone Person (QFZP) status; companies that qualify as a QFZP cannot elect SBR, making the choice between the two regimes a critical annual planning decision.
3. Exceeding the AED 3 million revenue threshold in any tax period permanently disqualifies an entity from SBR in all future periods — even if revenue subsequently falls below the threshold. The UAE's Small Business Relief framework offers one of the most practical tax concessions available to small businesses and independent professionals operating through UAE resident entities. The headline — 0% corporate tax on revenue under AED 3 million — is accurate, but the mechanism behind it is more precise than the headline suggests. SBR is a statutory election governed by Article 21 of Federal Decree-Law No. 47 of 2022 on Corporate Tax (the "Corporate Tax Law") and Ministerial Decision No. 73 of 2023, and it carries both conditions and trade-offs that every qualifying business needs to understand before filing. As of March 2026, SBR remains valid for tax periods ending on or before 31 December 2026. What comes after that period — whether an extension, a replacement mechanism, or a reversion to the standard 9% rate — has not been announced. Businesses whose revenue is approaching the threshold, or whose growth trajectory suggests they will exceed it in 2026, should begin planning now.

The AED 3 million threshold and the permanent disqualification rule Eligibility is determined by gross revenue, not net profit. Under Article 2 of Ministerial Decision No. 73 of 2023, the threshold applies both to the current tax period and to every prior tax period ending on or after 1 June 2023. An entity that exceeded AED 3 million in a prior period cannot elect SBR for the current period, regardless of its current revenue. The permanent disqualification rule is the provision most frequently misunderstood. If an entity's revenue exceeds AED 3 million in a single year — for instance, due to a high-value contract that is unlikely to recur — it is permanently ineligible for SBR in all subsequent periods. Revenue can fall to zero in the following year and the entity is still excluded. This one-way door makes revenue management in the year approaching the threshold a critical planning consideration. SBR versus Qualifying Free Zone Person status: the binary choice For businesses operating through free zone entities — including those registered with RAKEZ, DMCC, or other UAE free zones — the Corporate Tax Law presents a binary choice. Article 3 of Ministerial Decision No. 73 of 2023 explicitly excludes Qualifying Free Zone Persons from electing SBR. A QFZP — an entity that

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