A thorough guide on Small Business Relief (CTGSBR1), a program created to make the Corporate Tax regime easier to apply for eligible enterprises, has been published by the UAE Federal Tax Authority (FTA). This article explores the key features of this relief, enabling small firms to easily traverse the tax system’s initial phases. Businesses claim that whenever the Federal Tax Authority releases a new guide, they frequently encounter issues. For this reason, knowledgeable tax service providers advise the company on the latest tax changes.
- Guides can be lengthy and technical.
- They can be time-consuming and frustrating.
- Changes or modifications to existing regulations.
- It can bring confusion and misinterpretations.
This guide explains the overviews these following major topics:
- The introduction of Small Business Relief
- Eligibility criteria
- How it works
- How long it is available
- Related compliance requirements
Key Benefits of Small Business Relief:
- Decreased Compliance Burden: Filing complete tax returns and calculating taxable income are laborious processes that small firms can avoid. This enables them to concentrate on operations and growth.
- Tax-Free Period: Eligible companies with yearly sales under AED 3 million can function tax-free until December 31, 2026. This results in substantial money savings as well as less stress.
- Simplified Record-Keeping: Companies can further streamline their financial administration by implementing cash-based accounting.
Eligibility Requirements
- Resident Taxable Person: If they are considered UAE residents for corporate tax purposes, both natural people (individuals) and juridical persons (businesses) may be eligible.
- Revenue Threshold: The company’s total revenue for the applicable tax period and all prior periods must be AED 3 million or less.
The UAE’s Small Business Relief program demonstrates a strong commitment to helping small businesses expand and succeed. Entrepreneurs and new businesses can take advantage of this tax break and prosper in the new corporate tax environment by being aware of the rules and qualifying requirements.
Exclusions: Groups of multinational enterprises (MNEs): MNE-owned businesses are not qualified for Small Business Relief.
Eligibility conditions for small business relief
Eligible Individuals in the Free Zone
Companies in free zones that currently enjoy a 0% corporate tax rate on qualifying income are not eligible. According to the guide, “Any eligible Taxable Person (a resident taxable person, a natural person, or a juridical person) with revenue below or equal to AED 3,000,000 in the relevant Tax Period that ends or before 31 December 2026 may choose to be treated as having no Taxable Income in that period.” They won’t have to figure out their taxable income or file their entire tax return.
A person must be a Resident Person for Corporate Tax purposes to be eligible for small business relief. if their revenue during the applicable tax period and any prior tax periods was less than or equal to AED 3,000,000.
The only exclusion from this small company aid is that qualifying free persons and members of MNEs are not eligible.
Limitation on Tax Periods that End on or Before December 31, 2026,
There will be relief for small businesses for the Tax Period starting on or after June 1, 2023. Tax periods that conclude on or before December 31, 2026, will be eligible for this benefit. The revenue for the applicable tax period and all prior tax periods must be less than or equal to AED 3,000,000 to meet this eligibility requirement.
Example of electing for small business relief
Operating out of Abu Dhabi, Mr. X has a business. In terms of corporation taxation, he is a resident person.
His tax period finishes on December 31st, 2025, and he began trading on January 1st. In the most recent Tax Period, which ended on December 31, 2025, Mr. X earned AED 2,000,000.
Since Mr. X is a natural person with a business or activity that generates revenue of more than AED 1,000,000 but less than AED 3,000,000 for the 31 December 2025 Tax Period, he is qualified to receive Small Business Relief.
Since the 2025 Tax Period is Mr. X’s first year of operation, he has not exceeded the Revenue threshold from prior periods.
He needs to make an election on his tax return if he wishes to get the Small Business Relief.
Examples of non-resident persons
ABC Ltd., a US-based business, serves its clients in the United Arab Emirates from its office in Dubai. For the purposes of corporate taxation, ABC Ltd is a non-resident person. ABC Ltd generated AED 2,500,000 in revenue during its most recent tax period, which ended on December 31, 2024. Of that amount, AED 1,000,000 was attributed to its office in Dubai.
Regardless of its revenue or presence in Dubai, ABC Ltd is not qualified for Small Business Relief since it is a non-resident person.
How ebs can help your business?
ebs chartered accountants is aware of the difficulties companies encounter when adjusting to the UAE’s new corporate tax system. Our staff is well-versed on small business relief and can advise businesses on their eligibility. To assist companies of all sizes in adhering to, comprehending, and taking advantage of this tax relief program, we provide an extensive range of services. Our team of committed and skilled tax experts specializes in Small Business Relief and has in-depth understanding of the business tax environment in the United Arab Emirates.
Our areas of expertise in small business relief include the following:
- Eligibility assessment
- Record-keeping assistance
- Simplified Tax return filing
- Compliance guidance
- Tax planning strategies
Conclusion
For corporate tax purposes in the United Arab Emirates, small business assistance is available to small business citizens. This concession is intended to facilitate the implementation of the corporation tax regime. Relief for small businesses lessens compliance requirements, but the guidelines must be correctly comprehended. The technical jargon and evolving ideas in the guide are frequently hard to understand. However, the knowledgeable staff at ebs is your rescuer, so you don’t need to worry about it.
One of the top bookkeeping and accounting companies in Dubai, United Arab Emirates, is ebs . We have been assisting numerous companies in maintaining compliance with the UAE tax system. With the greatest user experience, we have more than 200 active clients.
We also offer bookkeeping and accounting services, auditing, due diligence audits, and many other services. Therefore, get in touch with us right now for a free consultation.
