If your UAE company has been electing Small Business Relief (SBR) to keep its Corporate Tax bill at zero, an important date is approaching. The relief is scheduled to sunset for tax periods ending on or after 1 January 2027 — which means, for most calendar-year businesses, the last period it can apply to is the one ending 31 December 2026.
This is not a penalty or a crackdown. Small Business Relief was always designed as a temporary cushion to ease smaller companies into the UAE's 9% Corporate Tax regime. But the sunset still matters: businesses that have been relying on it need to understand what happens next, whether they will start paying tax, and what records they will need to file a proper return.
This 2026 guide from Xrero (اكسريرو) explains who qualifies for Small Business Relief, exactly what the AED 3 million threshold and the sunset mean, and a practical checklist for the months ahead. Quick note: Xrero is a UAE-based accounting and ERP platform — it is not the New Zealand company Xero. Different companies, similar-sounding names.
Key takeaway: Small Business Relief lets a UAE resident person with revenue of AED 3 million or less elect to be treated as having no taxable income — so no Corporate Tax is payable. It applies to tax periods starting on or after 1 June 2023 and continues only for tax periods ending on or before 31 December 2026. You still must register and file a return; the relief is an election, not an automatic exemption.
What is UAE Small Business Relief?
Small Business Relief was introduced under Ministerial Decision No. 73 of 2023, issued under Article 21 of Federal Decree-Law No. 47 of 2022 (the Corporate Tax law). It gives qualifying small businesses a simple benefit: if you elect for the relief, your business is treated as having no taxable income for that tax period, so there is no Corporate Tax to pay.
It is worth understanding how this sits inside the wider regime. Under the standard UAE Corporate Tax rules, taxable income up to AED 375,000 is taxed at 0%, and income above that is taxed at 9%. Small Business Relief goes further for eligible companies — instead of calculating taxable income and applying rates, an eligible business simply elects to report no taxable income at all for the period, which also reduces compliance work.
Who qualifies?
To use Small Business Relief, your business generally must meet these conditions:
| Condition | What it means |
|---|---|
| Resident Person | You must be a UAE Resident Person for Corporate Tax purposes. |
| Revenue ≤ AED 3 million | Revenue must be AED 3 million or less in the relevant tax period and in all previous tax periods. |
| You make the election | The relief is not automatic — you elect for it in your Corporate Tax return. |
| Not a Qualifying Free Zone Person | QFZPs cannot use Small Business Relief. |
| Not part of an MNE Group | Members of Multinational Enterprise Groups are excluded. |
One detail trips people up: the AED 3 million threshold is cumulative across periods. If your revenue exceeds AED 3 million in any tax period, you lose the relief from that point forward — you cannot dip back under the threshold one year and reclaim it.
What does the 31 December 2026 sunset actually mean?
The AED 3 million revenue threshold applies to tax periods starting on or after 1 June 2023, and Small Business Relief continues only for tax periods ending on or before 31 December 2026. After that, the relief — as it currently stands — is no longer available.
For a typical company with a financial year ending 31 December, that breaks down simply:
- Tax period ending 31 Dec 2026 — you can still elect for Small Business Relief (if eligible). This is the last calendar-year period it covers.
- Tax period starting 1 Jan 2027 — the relief no longer applies. You move to the standard regime: 0% up to AED 375,000 and 9% above.
If your financial year does not follow the calendar, look at when your period ends. The cut-off is tied to the period-end date being on or before 31 December 2026.
Don't confuse the two key dates. 31 December 2026 is the sunset for Small Business Relief. Separately, the first Corporate Tax return for a year ending 31 December 2025 is due 30 September 2026 (nine months after year-end). They are different obligations.
What SMEs should do next — a 2026 checklist
| Step | Why it matters |
|---|---|
| 1. Confirm you are registered for Corporate Tax | Registration is mandatory even if you elect the relief and owe nothing. |
| 2. Track revenue against AED 3M continuously | Crossing the threshold in any period ends the relief permanently. |
| 3. Make the SBR election in your 31 Dec 2026 return (if eligible) | It is not automatic — you must elect each period. |
| 4. Build clean books before 2027 | Once relief ends, you need proper income, expense and adjustment records to calculate 9% CT. |
| 5. Forecast your first taxable year | Estimate likely taxable income for FY2027 so the tax bill is not a surprise. |
| 6. Talk to a licensed tax advisor | For elections, free-zone status, and transition planning specific to your business. |
The single biggest practical shift is the one in step 4. While you were electing Small Business Relief, your books could be relatively light. Once you are in the standard regime, the FTA expects you to compute taxable income from a proper set of financial records — accruals, allowable deductions, and adjustments. The earlier you tidy that up, the smoother your first taxable return will be.
How Xrero helps
Xrero is built for UAE Corporate Tax from the ground up, so the transition off Small Business Relief is far less painful. Instead of scrambling to reconstruct a year of records in September, you keep CT-ready books all year:
- Continuous revenue tracking so you can see, in real time, whether you are approaching the AED 3 million threshold.
- Structured income and expense records that give you the figures a Corporate Tax return needs — no last-minute reconstruction.
- FTA-compliant accounting records and FAF export to support filing and any future review.
- 9% Corporate Tax-aware reporting so that when the relief ends in 2027, calculating taxable income is a continuation of your normal bookkeeping, not a project.
Xrero does not file your return for you or replace professional tax advice — but it gives you the clean, year-round books that make electing the relief now, and computing tax later, straightforward. See Corporate Tax software for the UAE for how it works.
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Book a demoFrequently asked questions
What is the revenue threshold for UAE Small Business Relief?
AED 3 million or less. Your revenue must be at or below AED 3 million in the relevant tax period and in every previous tax period. If you exceed it in any period, the relief is lost going forward.
When exactly does Small Business Relief end?
It continues only for tax periods ending on or before 31 December 2026. For a calendar-year business, the period ending 31 December 2026 is the last one it can apply to; periods starting in 2027 fall under the standard regime.
Do I still need to register and file if I use the relief?
Yes. Small Business Relief is an election you make in your Corporate Tax return, not an automatic exemption. You must be registered for Corporate Tax and file a return even when no tax is due.
Can free zone companies use Small Business Relief?
Qualifying Free Zone Persons cannot use Small Business Relief. Members of Multinational Enterprise Groups are also excluded. Free-zone status interacts with several reliefs, so confirm your position with a licensed advisor.
What tax rate applies after the relief ends?
The standard UAE Corporate Tax regime: 0% on taxable income up to AED 375,000 and 9% on taxable income above that threshold.
How should I prepare my accounting before 2027?
Keep clean, year-round records of income, expenses and adjustments so taxable income can be computed without a last-minute reconstruction. CT-aware software like Xrero keeps these records ready as you go.
This is general information, not tax or legal advice — verify current rules with the Federal Tax Authority (tax.gov.ae) or a licensed advisor before acting. Pricing and plans: see /pricing.