Small Business Relief and free zones

What are the traps with Small Business Relief?

Often questioned by the tax authority: take care

In short: The main ones: going over 3,000,000 AED once ends the relief for every later year; all income counts, even a one-off sale; splitting one business into several to stay under the limit can be treated as abuse; and losses from relief years cannot be used later.

The basic rule

The test looks at this tax year and every earlier one. If the FTA finds that one business was split between people on purpose, and the whole business earns more than 3,000,000 AED, the relief is treated as a scheme to avoid tax. The FTA looks at whether there was a real business reason and at the financial, economic and organisational links.

When it is different

One period above AED 3,000,000 (for example after an unusually large contract) makes you ineligible for all later periods.
Tax losses incurred in a period where the relief is elected cannot be carried forward; losses from earlier periods stay on hold and can be used once you stop electing the relief.
Being in the relief does not remove registration, return, record-keeping or arm's length obligations.
If you exceed AED 3,000,000, the 0% band on the first AED 375,000 of taxable income still applies.

Documents to keep

Revenue history for all periods
Ownership details of related businesses

How safe is it?

Often questioned by the tax authority: take care High: errors here change the whole tax position.

When to ask a professional

Ask before a large one-off sale, before opening a second company, or when revenue approaches AED 3,000,000. Who can confirm it for your own case: an FTA-registered tax agent (a tax professional approved by the UAE tax authority), or the optional year-end review in SoloBooks.

Check it with the free calculator: Small Business Relief calculator →

Sources

Ministerial Decision No. 73 of 2023 on Small Business Relief — Art. 2, 4, 5 and 6
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (consolidated, unofficial English translation) — Art. 21(2) and Art. 50
FTA Corporate Tax topic: Small Business Relief — Example: revenue in previous Tax Periods

Last verified: 19 October 2026

General information, not tax advice. Your situation may differ.

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