Small Business Relief ends 31 December 2026. Businesses with revenue ≤AED 3 million enjoy 0% corporate tax until then; from 2027, tax.gov.ae rules 9% applies on profit above AED 375,000. Register with the FTA now to lock compliance and plan your transition before the deadline.
What Is Small Business Relief and Who Qualifies?
The business setup in Dubai environment includes a temporary relief scheme for business setup in Dubai entities. Under UAE Corporate Tax rules (mandated by the Federal Tax Authority / FTA), if your total revenue does not exceed AED 3 million in a tax period, you owe 0% corporate tax — even though registration is mandatory. This applies to sole traders, general partnerships, and corporate entities registered with the DET (Department of Economy and Tourism, formerly DCCI in Dubai) or equivalent emirates’ authorities. The relief is an incentive for SMEs; it does not replace registration with the FTA.
Confirm your eligibility with the FTA via tax.gov.ae or contact DBS on WhatsApp +971 54 332 2846 for a tailored assessment.
When Exactly Does Small Business Relief End?
Small Business Relief applies to tax periods ending on or before 31 December 2026. This means your last 0% relief window closes at the end of 2026. For tax periods beginning 1 January 2027 onwards, the relief is withdrawn. If your calendar year ends 31 December, your 2026 year-end return will be your final 0% filing. Calendar-year starters should note: you have exactly 12 months from now (in 2025) to optimise your structure before the change lands.
Mark 31 Dec 2026 in your compliance calendar and notify your accountant.
What Happens to Your 0% Rate from 2027?
From 1 January 2027, Small Business Relief ceases. Your corporate tax position will depend on two rules:
| Scenario | 2027 Tax Position |
|---|---|
| Mainland company, taxable profit ≤AED 375,000 | 0% corporate tax (permanent small-business threshold) |
| Mainland company, taxable profit >AED 375,000 | 9% on the amount exceeding AED 375,000 |
| Free-zone company (QFZP status) | 0% on Qualifying Income only; 9% on non-qualifying income from dirham one |
The key takeaway: the 0% relief tied to revenue ends, but the 0% threshold on taxable profit up to AED 375,000 persists under standard corporate tax law.
Should You Switch to a Free-Zone QFZP Structure?
Free-zone company formation — particularly under the Dubai free zone company formation schemes (Jafza, DAFZA, Dubai Silicon Oasis, QFZP, etc.) — can lock 0% tax on Qualifying Income. Under the Qualifying Free Zone Person (QFZP) regime, a free-zone entity pays 0% on income from core business activity, provided it meets the de-minimis rule: non-qualifying income ≤ 5% of revenue or AED 5 million (whichever is lower). Breach the threshold and you lose 0% status for approximately 5 years, triggering 9% on all non-qualifying income retroactively.
Switching is advantageous only if your revenue exceeds AED 3 million, your business fits a qualifying sector (manufacturing, professional services, tech, trading), and you can isolate non-qualifying income. Switching involves re-registration costs (licence fee AED 1,500–2,500 typically) and new investor visa/Emirates ID (AED 800–1,200 + biometric fees). Weigh this against 9% tax on profit >AED 375k.
Book a free consultation to model your 2027 scenario — mainland vs. free-zone.
Do You Still Need to Register for Corporate Tax at 0%?
Yes, absolutely. Even if your revenue qualifies for 0% relief under Small Business Relief (≤AED 3M), or if your mainland taxable profit is ≤AED 375,000, registration with the Federal Tax Authority (FTA) is mandatory. Failure to register by the deadline incurs penalties. Registration is free, but you must submit the form via tax.gov.ae or via an accountant/agent. You must file annual Corporate Tax returns even at 0% — non-filing triggers compliance fines regardless of tax owed.
Additionally, VAT registration becomes mandatory once turnover reaches AED 375,000 (5% standard rate in the UAE). Personal income tax remains 0% in the UAE, and to claim a UAE Tax Residency Certificate (needed for DTAA relief and some jurisdictions’ CRS reporting), you must spend 183+ days in the UAE in the tax year, or 90 days plus a home and/or business tie.
Dual-Currency All-In Setup Cost Table (2026)
Below is an itemised cost breakdown for mainland company setup with Small Business Relief registration, plus common add-ons. Costs are in AED ranges (indicative at current rates — convert at today’s rate; rates move):
| Item | AED Range | Notes |
|---|---|---|
| Trade Licence (Year 1) | AED 600–1,200 | DET/Local Emirate; service + fee |
| Office Registration & Ejari | AED 200–500 | If renting; includes contract notarisation |
| Company Registration (DNCC/DED) | AED 800–1,500 | Memorandum, incorporation, filing |
| Investor/Founder Visa | AED 800–1,200 | GDRFA; includes processing + visa sticker |
| Emirates ID (Biometric) | AED 140–220 | ICP fee; valid 5 years |
| Medical Fitness (mandatory for visa) | AED 100–250 | Approved clinic; e.g. NMC, Medicana |
| FTA Corporate Tax Registration | Free (online) | Mandatory; no fee; tax.gov.ae |
| Bank Account Opening | Varies | Some banks offer free; others charge AED 50–300 |
| Flexi-Desk/Virtual Office (optional, 1 month) | AED 400–800 | If no physical office; used for address only |
| Business Insurance (e.g. liability, 1 year) | AED 500–1,500 | Depends on sector; not mandatory but advised |
| Total All-In (Mainland, No Physical Office) | AED 4,540–7,960 | Excludes ongoing accounting |
Currency Note: Convert AED to your local currency at today’s rate (e.g. AED 1 ≈ USD 0.27, EUR 0.25, GBP 0.21 at current rates — check with your bank for live rates). Costs vary by emirate, business activity, and service provider choice.
Day-by-Day Setup Timeline
Here is a realistic establishment schedule for a mainland company with Small Business Relief registration:
| Day(s) | Task | Owner/Authority |
|---|---|---|
| Day 1–2 | Prepare business plan, activity codes, shareholder docs | Founder |
| Day 3–4 | Arrange office address (lease, Ejari, or virtual); medical check | Founder + clinic |
| Day 5–6 | Submit company registration (DNCC/DED online portal) | DED or equivalent |
| Day 7–10 | Obtain incorporation certificate; apply for visa (GDRFA) | DNCC/DED + GDRFA |
| Day 11–14 | Receive visa approval; collect passport + visa sticker; apply for Emirates ID | GDRFA + ICP |
| Day 15–18 | Collect Emirates ID biometric; apply for trade licence (DET) | ICP + DET |
| Day 19–21 | Receive trade licence; open bank account (submit docs) | DET + bank |
| Day 22–25 | Register with FTA for Corporate Tax (online, free) | FTA (tax.gov.ae) |
| Day 26–28 | Bank account activation; receive cheque book; confirm VAT threshold if needed | Bank |
| Day 28–30 | Ready to operate (all licences + tax registration live) | — |
Notes: Processing times can overlap (submit visa while DED registration is pending). Some steps are faster if submitted online. Delays due to document corrections can add 5–10 days.
Banking Approval Documents Checklist
UAE banks require the following to approve a current/business account for a new company:
- Trade Licence (original + colour copy) — latest issue from DET or emirate authority
- Certificate of Incorporation — from DNCC/DED, showing company name, CR number, shareholders
- Memorandum & Articles of Association (M&A) — certified copy; outlines governance
- Founder/Director Passport (original + colour copy + copy of visa page + Emirates ID)
- Authority Letter — authorising the accountant/founder to open the account on behalf of the company (notarised if not a shareholder)
- Proof of Address — Ejari/lease agreement, or utility bill in the registered office name (office must be linked to trade licence)
- Bank Form/Application — completed, signed by an authorised signatory (shareholder or POA holder)
- Shareholders’ Resolution — confirming the account opening and appointing signatory/ies
- No Objection Certificate (NOC) — if required by the bank, from relevant emirate’s chamber of commerce (usually waived for mainland)
- Tax Residency Certificate (optional) — if founder plans to claim relief under a double-taxation agreement; apply via FTA once registered (requires 183 days UAE presence or 90 days + home/business tie)
Processing: 5–10 business days from submission. Some banks (FAB, ADIB, Emirates NBD, DIB) offer faster track for setup companies if submitted in person with all originals. Have a scanned PDF backup of every document.
Frequently asked questions
What is Small Business Relief and who qualifies?
Small Business Relief is a UAE corporate tax exemption under FTA rules: if your total annual revenue does not exceed AED 3 million in a tax period, you owe 0% corporate tax. It applies to sole traders, partnerships, and corporate entities registered with the DET or emirate authority. Registration with the FTA is mandatory even at 0%. The relief is an exemption, not a registration waiver — your business must file annual Corporate Tax returns to stay compliant.
When exactly does Small Business Relief end?
Small Business Relief applies to tax periods ending on or before 31 December 2026. From 1 January 2027 onwards, the relief is withdrawn. If your calendar year-end is 31 December, your 2026 year-end return will be your final 0% filing under this scheme. Businesses with non-calendar year-ends should confirm their relief expiry date with their accountant or the FTA.
What happens to my 0% rate in 2027?
From 2027, Small Business Relief ceases, but a permanent threshold replaces it: mainland companies pay 0% corporate tax on taxable profit up to AED 375,000, and 9% on the excess. Free-zone companies (QFZP status) pay 0% on Qualifying Income only; non-qualifying income is taxed at 9% from the first dirham. Your 2027 position depends on whether you stay mainland or switch to a free-zone structure before 31 Dec 2026.
Should I switch to a QFZP free-zone structure?
Switching to a Qualifying Free Zone Person (QFZP) free-zone company can lock 0% tax on qualifying business income, provided non-qualifying income stays below 5% of revenue or AED 5 million (whichever is lower). Switching costs AED 1,500–2,500 (licence, visa, Emirates ID, biometric fees). Switch only if your revenue exceeds AED 3 million, your business fits a qualifying sector, and you can isolate non-qualifying income. DBS can model both scenarios for you.
Do I still need to register for Corporate Tax at 0%?
Yes. FTA registration is mandatory even if you qualify for 0% tax relief under Small Business Relief or if your taxable profit is ≤AED 375,000. Registration is free (tax.gov.ae) but failure to register incurs penalties. You must file annual Corporate Tax returns at 0% to stay compliant. Additionally, once turnover reaches AED 375,000, you must register for VAT (5% standard rate). Penalties for non-compliance are steep.
Is Dubai really ‘100% tax-free’ as claimed in marketing?
No. Since 2023, when UAE Corporate Tax took effect, Dubai is no longer ‘100% tax-free.’ However, personal income tax remains 0% in the UAE (you keep all salary/dividend income). Businesses must register for and file Corporate Tax, even if the rate is 0%. The confusion arises from zero personal income tax conflated with corporate tax exemption; they are separate. Free-zone companies enjoy 0% on qualifying income, but still must comply with filing obligations.
How do I claim a UAE Tax Residency Certificate?
A UAE Tax Residency Certificate is required for DTAA (double-tax agreement) relief claims and CRS reporting to your home country. To qualify, you must spend 183+ days in the UAE in a tax year, or 90+ days plus have a home and/or active business presence in the UAE. Apply via the FTA portal (tax.gov.ae) once you meet the residency threshold. Processing takes 10–15 business days. Your accountant can guide you; DBS can assist with documentation.
Get expert help in 20 minutes
Talk to DBS on WhatsApp +971 54 332 2846 or email inquiry@dubaibusinessservices.com for a free, fully itemised cost breakdown in your currency.
