Is a Natural Person Eligible for the Application of the Small Business Relief?
Small businesses drive growth in Dubai and across the UAE. The government knows this and gives special tax relief to help these businesses. If you run a small business as a natural person, you might wonder if you can get Small Business Relief. Let’s dive into what this relief is, who gets it, and how you can benefit.
What’s Small Business Relief in the UAE?
Small Business Relief is a tax benefit for small businesses in the UAE. The UAE government set up this relief to make accounting simple for small businesses. With Small Business Relief, you can use the cash accounting method, so you record income only when you receive money and record expenses only when you pay them. This makes tax time much easier for small business owners.
If your business fits these conditions, you may claim Small Business Relief for tax periods ending on or before December 31, 2026:
- You are a natural person (an individual)
- You run a business with yearly revenue of AED 3 million or less
- You’re not part of a large multinational business group earning more than AED 3.15 billion worldwide each year
- You’re not a Qualifying Free Zone Person
If your business qualifies, you can treat your taxable income as zero during the relief period, and you won’t pay corporate tax.
Can a Natural Person Apply for Small Business Relief?
The answer is yes. A natural person in Dubai can apply for Small Business Relief if they meet the rules. It’s not just for registered companies—freelancers, consultants, and other individuals can claim this relief if their total business turnover is AED 3 million or less per year. If your turnover is over AED 1 million, you need to register for UAE Corporate Tax, but you can still elect for Small Business Relief if your revenue is within the threshold.
Here’s who can apply:
- Freelancers who earn money for their services
- Consultants who run their own business
- Sole proprietors running small shops or online businesses
But remember: Some activities don’t qualify, like tax shelters or special partnerships where profits and losses are divided in certain ways. Also, if you claim Small Business Relief, you can’t use tax losses during the relief period, but you can carry old losses forward for future years if you follow the Corporate Tax Law.
What Are the Steps to Claim Small Business Relief?
Let’s look at the main steps:
- Check if you qualify:
Make sure you are a resident person or a business with AED 3 million or less in annual revenue. - Register for Corporate Tax:
If your turnover is above AED 1 million, you need to register with the Federal Tax Authority (FTA). - Use the cash basis accounting method:
Only record money when it comes in or goes out. - Submit the right forms:
Tell the FTA you want to claim Small Business Relief for the tax period. - Keep your records safe:
Store your receipts and proof for every expense and all your income.
Are There Any Limits or Risks?
Yes, there are limits. If your business does not follow the rules, the FTA can cancel your relief. You also can’t share or move tax losses in the years you use this relief. Activities that are not regular business, like special investment funds or certain syndicates, usually can’t get Small Business Relief.
Important: If you make a mistake or don’t file your forms correctly, you could lose your relief or even pay a penalty.
Why Does Small Business Relief Matter?
Small Business Relief helps you:
- Save time by using simple cash accounting
- Avoid complicated tax calculations
- Focus more on running your business
- Pay less (or even zero) in corporate taxes if you qualify
The UAE government made this rule to help small businesses grow and succeed.
How Mubarak Al Ketbi (MAK) Auditing Can Help
Mubarak Al Ketbi (MAK) Auditing is always ready to help you. Our team understands the ins and outs of Small Business Relief. We’ll show you the ropes and keep your business on track. You can rest easy when you put your tax matters in our hands because we believe every business should have a fair shake. When you work with us, you’ll see we really “go the extra mile” for our clients!
- For more information, visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates - Or contact/WhatsApp: +971 50 276 2132
