How do you apply for Small Business Relief in UAE?
To apply for Small Business Relief in the UAE, register with the Federal Tax Authority (FTA) to obtain a Tax Registration Number (TRN). Then, elect Small Business Relief in your simplified tax return for the relevant tax period if your revenue is below AED 3,000,000. Maintain financial records to prove eligibility and submit your return via the FTA EmaraTax portal. This tax exemption simplifies compliance and reduces corporate tax liability for resident persons.
How to Apply for Small Business Relief in UAE – 2025 Complete Guide
The prospect of starting a business in Dubai or any part of the UAE may seem pragmatic and exciting, but the tax requirements can feel overwhelmingly complicated. But, with the UAE corporate tax of June 1, 2023, recently becoming applicable, small businesses have the opportunity to save significantly with Small Business Relief. This exemption allows qualifying firms to forgo corporate tax on profits, enabling them to grow their business further. Whether considering a new company formation in Dubai or expansion in a free zone, knowing how to apply for Small Business Relief can expand your financial opportunities.
A step-by-step guide on applying for benefits with savings potential will be outlined for you, including details on taxes and compliance. From every tax return filing, we walk you through every need needed to operate successfully in the UAE business framework. Now, let’s embark on these steps together to mitigate all economic value losses you may face while operating in UAE and emerge into a trading giant around the globe!
What Is Small Business Relief in UAE?
A. Understanding UAE Corporate Tax
The UAE has established a 9% corporate tax on business income exceeding AED 375,000 to broaden its economy and comply with external economies. There are no taxes levied on personal income, but business profits are taxed. Income taxes are uniformly absent in the UAE. This model of imposing taxes strengthens businesses yet may be a hurdle for smaller firms. This is where Small Business Relief can help by relieving tax obligations towards qualifying persons.
B. How Small Business Relief Works
Eligible businesses under Small Business Relief are treated as having no taxable income, meaning no corporate tax payment for that specific period. If revenue isn’t exceeding AED 3,000,000, you’re eligible to claim the relief bol,ster compliance and improve cash flow, all at the same time! With these provisions set, establishing a business in the UAE has become extremely easy.
Who Qualifies for Small Business Relief in UAE?
A. Eligibility Criteria for Tax Exemption
To claim Small Business Relief, your business must meet these eligibility criteria:
- Resident Taxpayer Status: A business taxpayer qualifies as a resident if they are an individual or an entity, such as an LLC, based in the UAE. That is a benefit of LLCs incorporated or managed in the UAE. Moreover, individuals (natural persons) are only able to qualify if their business turnover is more than AED 1,000,000.
- Revenue Threshold: The individual is not allowed to exceed AED 3,000,000 in gross revenue across all reporting periods before December 31 2026. Gross revenue is defined as the total income stream from the business, which includes sales of goods and services as well as selling off business assets according to IFRS or cash-based accounting.
- Not a Financial Institution or Holding Company: The above-mentioned business entities are subject to different tax regulations and, thus, don’t meet the criteria.
B. Who Is Ineligible for Small Business Relief?
Some businesses can’t claim Small Business Relief, including:
- Multinational Enterprise Groups (MNEs): MNEs’ subsidiaries operating within MNEs and having consolidated revenue above AED 3.15 billion are excluded because of their ability to manage tax compliance.
- Qualifying Free Zone Persons: Businesses that operate within Free Zones and have a 0% corporate tax on qualifying income do not need this relief. Non-qualifying Free Zone businesses may apply if other criteria are met.
- Artificial Separation: Dividing a business into many entities to remain under the revenue threshold is prohibited. The Federal Tax Authority (FTA) can impose penalties for such business behaviours.
Pro tip: You need financial statements, revenue records, and proof of resident status. These are submitted via the FTA EmaraTax portal during tax return filing.
Steps for How to Apply for Small Business Relief
Applying for Small Business Relief is straightforward if you follow these steps. This method ensures you meet compliance requirements and secure tax exemptions.
Step 1: Register with the Federal Tax Authority
The business must be registered with the Federal Tax Authority (FTA) to get a Tax Registration Number (TRN). This step is essential to all taxable individuals.
- How: Log onto the FTA EmaraTax portal and register an account, then upload your trade license and Emirates ID.
- Timeline: Registration takes 5-10 business days.
- Cost: Consultancy might be needed for more complex business structures, else it’s free.
Step 2: Verify Your Revenue Threshold
Confirm that your revenue does not exceed AED 3,000,000 for the current tax period and all prior periods starting June 1, 2023. You can utilize gross income capitalisation accounting under the IFRS or cash accounting method.
- Tools: Revenue can be monitored using accounting software such as QuickBooks or Xero.
- Records: Retain sales invoices, receipts, and documents pertaining to the sale of assets as evidence.
- VAT that has been collected should be excluded since it is payable to the FTA. Non-cash receipts must be included at market value.
Step 3: Elect Small Business Relief in Your Tax Return
Elect Small Business Relief when filing your tax return for the relevant tax period. This notifies the FTA of your intent to claim the relief.
- Where: In the EmaraTax portal, select the Small Business Relief option in the simplified tax return form.
- Deadline: Within 9 months after the tax period ends (e.g., September 30, 2026, for a December 31, 2025, period).
- Note: Once submitted, you can’t claim relief retroactively for that period.
Step 4: Maintain Simplified Financial Records
Small Business Relief allows simplified record-keeping, but you must maintain financial records to prove eligibility during FTA audits.
- What to Keep: Revenue records, financial statements, and business activity logs.
- Retention Period: At least 5 years, per Ministry of Finance best practices.
- You skip complex taxable income calculations and transfer pricing documentation, saving time and costs.
Step 5: Submit Your Tax Return via EmaraTax
File your simplified tax return through the EmaraTax portal. The FTA reviews your eligibility and confirms your tax exemption.
- Process: Upload financial records, complete the tax return, and submit.
- Support: Business setup consultants in Dubai can streamline filing for accuracy.
- Outcome: No corporate tax payment if approved, boosting your cash flow.
Benefits of Small Business Relief for UAE Businesses
A. Reduced Tax Liability and Cash Flow Boost
Small Business Relief eliminates corporate tax on taxable income, offering immediate financial flexibility. This tax-free status lets you reinvest profits into business growth, equipment, or marketing.
- Impact: Businesses with revenue under AED 3,000,000 can save thousands annually.
- Profit reinvestment fuels economic support for small businesses.
B. Simplified Compliance and Cost Savings
The relief simplifies tax compliance, reducing the need for complex taxable income calculations or transfer pricing documentation. This cuts administrative cost savings significantly.
- Time Saved: Less time on tax return filing means more focus on business activities.
- Lower costs for accounting services and reduced risk of FTA penalties due to errors.
Pro Tip: Tax relief includes Small Business Relief and Free Zone exemptions, enhancing cost reduction.
Compliance Requirements for Small Business Relief
A. Record-Keeping and Retention Period
Even with simplified compliance, you must maintain financial records to support your revenue threshold and resident status. The Ministry of Finance recommends a 5-year retention period for:
- Sales invoices
- Asset sale receipts
- Financial statements (cash or accrual basis)
B. Avoiding Artificial Separation Pitfalls
The FTA prohibits artificial separation, where businesses split operations to stay below AED 3,000,000. Violators face penalties and tax repayment.
- How to Avoid: Maintain unified financial records and consult business setup consultants in Dubai.
- The UAE tax framework enforces regulatory compliance to protect business incentives.
Common Challenges and How to Overcome Them
A. Navigating Revenue Calculations
Calculating revenue can be tricky, especially with non-cash receipts or foreign income. Use IFRS or cash basis accounting and exclude VAT.
- Solution: Hire an accountant or use software to ensure accuracy.
- Investor confidence grows with transparent revenue reporting.
B. Ensuring FTA Compliance
Meeting FTA requirements, like timely tax return filing, can be daunting for new businesses.
- Solution: Work with business setup in UAE experts to avoid errors.
- Federal Tax Authority oversees compliance for tax exemptions.
Pro Tips for Maximizing Small Business Relief
A. Leveraging Free Zone Benefits
While Qualifying Free Zone Persons can’t claim Small Business Relief, non-qualifying Free Zone businesses can. Business setup in freezone offers 0% corporate tax, 100% foreign ownership, and customs duty exemption.
Tip: Choose Free Zones like DMCC or JAFZA for business-friendly policies.
B. Optimizing Business Setup in UAE
Partner with business setup consultants in Dubai to streamline company formation in Dubai. They ensure FTA registration, tax compliance, and eligibility for Small Business Relief.
Tip: Consultants save time and reduce administrative burden during business setup.
Frequently Asked Questions About Small Business Relief
Q1: How to apply for Small Business Relief UAE 2025?
Register with the FTA, confirm your revenue is below AED 3,000,000, opt for relief in your tax return, and submit through EmaraTax.
Q2: What documents are needed for Small Business Relief?
Submission via the FTA portal requires resident status documents alongside financial statements and revenue records.
Q3: Who qualifies for UAE corporate tax exemption?
Residents with revenue below AED 3,000,000, excluding MNEs and qualifying free zone individuals, are eligible.
Q4: What are Free Zone tax benefits in UAE?
Free Zones are ideal for business setup as they offer 0% corporate tax, 100% foreign ownership, and exemption from customs duties.
Conclusion: Start Saving with Small Business Relief Today
Small businesses in the UAE can get relief that helps them grow. This support offers essential tools for success. Our guide helps you claim tax exemption easily, cut compliance burdens, and boost cash flow. Whether you plan to set up a business in Dubai or a free zone, this relief helps grow your business in the UAE’s trade hub.
Claim tax-exempted profits before it’s too late! Register with the Federal Tax Authority. Choose Small Business Relief. Also, talk to business setup Consultant in Dubai. They can help you navigate the UAE corporate tax system more easily. Start today and fortify your business in the UAE.
