Small Business Relief is presented almost universally as an unqualified benefit: revenue below AED 3 million, no Corporate Tax payable. For a profitable small company that description is accurate. For a company reporting a loss, or approaching a period of rapid growth, the election can be the more expensive of the two options — and it cannot be reversed once the return is filed.
Two circumstances make this worth revisiting now. The relief is available only for tax periods ending on or before 31 December 2026, so for a calendar-year business the current period is the last in which the election can be made. And the consequence that determines whether the election is sensible — the treatment of tax losses — is rarely raised at the point the decision is taken.
Under Ministerial Decision No. 73 of 2023, a resident taxable person may elect to be treated as having no taxable income for a tax period where revenue in that period, and in every preceding period, does not exceed AED 3,000,000. The election is made in the Corporate Tax return through the EmaraTax portal; it is not automatic and it is not applied by default.
The relief applies to tax periods commencing on or after 1 June 2023 and ending on or before 31 December 2026. Once revenue exceeds the threshold in any period, the relief ceases to be available for that and all subsequent periods.
Two categories of taxable person are excluded from the relief irrespective of revenue:
Eligibility should therefore be confirmed on three fronts before the election is considered: revenue in the current and all preceding periods, residence status, and the absence of either exclusion.
Electing the relief means the period is treated as producing no taxable income. It follows that:
For a company with taxable profit in the period, none of this matters: there is no loss to forfeit, and the relief removes a real liability. For a company with a loss, the relief removes a liability that was largely nil in any case, and surrenders an asset that would have reduced tax in later periods.
Consider a company with revenue of AED 2.2 million and a loss of AED 400,000 in the final period in which the relief is available, followed by two profitable periods of AED 600,000 and AED 900,000 respectively. Corporate Tax applies at 0% on taxable income up to AED 375,000 and 9% above that threshold; carried-forward losses may offset a maximum of 75% of taxable income in a later period.
| Position | Year 1 (loss 400,000) | Year 2 (profit 600,000) | Year 3 (profit 900,000) | Total tax |
|---|---|---|---|---|
| Small Business Relief elected in Year 1 | Nil — loss forfeited | 20,250 | 47,250 | AED 67,500 |
| Standard regime throughout | Nil — loss carried forward | 0 | 47,250 | AED 47,250 |
The election costs AED 20,250 across the three periods. The relief eliminated tax in a period where none was payable, and destroyed a loss that would have sheltered the following year's profit entirely.
The position reverses where Year 1 is profitable. On a profit of AED 500,000 in Year 1, the same company saves AED 11,250 by electing. The decision therefore turns on the result of the period and the outlook for the periods that follow — not on eligibility alone.
A calculator comparing both paths over three periods, including the effect of forfeited losses, is available at involane.com/tools/sbr-calculator. It takes your revenue and result for three periods and returns the total tax under each approach.
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Regulatory statements on this page come from the sources above. Anything about how long work takes, what it costs, or what companies typically do is our own estimate — it is not in any of them, and it carries no more weight than an estimate.
This material is provided for general information only and does not constitute tax, legal or accounting advice. Requirements and thresholds change; positions depend on individual circumstances. Consult a qualified adviser before acting. Position as at July 2026.