Small Business Relief Is Ending — Here Is What Every Dubai Business Needs to Do

Answer Capsule: Small Business Relief allows companies with revenue under AED 3 million to pay zero corporate tax. This relief expires on December 31, 2026. From January 2027, all companies must compute taxable income and pay 9% on amounts exceeding AED 375,000. Companies currently relying on Small Business Relief should start preparing now — engage an accountant, set up proper bookkeeping, and understand which expenses are deductible.

If your company has been claiming Small Business Relief, you have been living in a comfortable grace period. That period ends in less than 9 months. Here is what you need to do.

What Changes on January 1, 2027

From 2027, every mainland company — regardless of revenue — must maintain proper accounting records, compute taxable income (revenue minus allowable deductions), file a tax return with the FTA within 9 months of their financial year end, and pay 9% on taxable income above AED 375,000.

Your Preparation Checklist

1. Engage an accountant if you do not already have one. Tax filing requires professional financial statements.
2. Set up proper bookkeeping. If your records are informal (spreadsheets, bank statements only), upgrade to proper accounting software.
3. Understand deductible expenses. Every legitimate business expense reduces your taxable income — salaries, rent, PRO fees, marketing, insurance, depreciation.
4. Plan for cash flow. Tax payments are due within 9 months of year-end. Budget for this.
5. Review your structure. Companies with mixed mainland and international revenue may benefit from restructuring. Consult a tax advisor.

The Silver Lining

For most small businesses, the effective tax burden will be modest. A company with AED 2 million in revenue and AED 1.8 million in expenses has taxable income of AED 200,000 — below the AED 375,000 threshold, meaning zero tax. The 9% rate only applies to income above that threshold.

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