Understanding Eligibility for Small Business Relief under UAE Corporate Tax Law

Case 1: Small Business Relief for a New Business

Scenario:
Mr. X, a resident in Abu Dhabi, started his business on January 1, 2025. His business operates under a tax period that ends on December 31 each year. During his first year of operation, Mr. X generated revenue of AED 2,000,000.

Analysis:
As a resident person for Corporate Tax purposes, Mr. X qualifies for Small Business Relief. His revenue of AED 2,000,000 is between the eligible range of AED 1,000,000 to AED 3,000,000 for the tax period ending December 31, 2025. Since this is his first year of operation, there is no previous revenue threshold breach.

Conclusion:
To benefit from Small Business Relief, Mr. X must make an election in his Tax Return for the 2025 tax period.

Case 2: Ineligibility of Non-Resident Persons

Scenario:
ABC Ltd, a company incorporated in the USA, operates an office in Dubai to assist UAE-based clients. In the tax period ending December 31, 2024, ABC Ltd generated AED 2,500,000 in revenue, with AED 1,000,000 attributable to its Dubai office.

Analysis:
Despite generating revenue in the UAE, ABC Ltd is a non-resident person for Corporate Tax purposes. Non-resident persons, regardless of revenue or local office presence, do not qualify for Small Business Relief.

Conclusion:
ABC Ltd is not eligible for Small Business Relief due to its non-resident status.

Case 3: Revenue Threshold Breach in Previous Tax Periods

Scenario:
Ms. Y, a resident person operating a business in Sharjah, follows a tax period ending on December 31 each year. In 2026, her business generated AED 1,900,000 in revenue. However, in the previous year (2025), she had revenue of AED 4,300,000.

Analysis:
Ms. Y’s revenue in 2025 exceeded the AED 3,000,000 threshold, disqualifying her from Small Business Relief for the 2026 tax period, even though her 2026 revenue is below the threshold.

Conclusion:
Ms. Y is not eligible for Small Business Relief for the 2026 tax period due to exceeding the revenue threshold in 2025.