TaxSavvyAE

Loss year and Small Business Relief

My startup made a loss this year. Should I still elect Small Business Relief?

The situation

If you elect the relief, you are treated as having no taxable income for that period and cannot use the period for loss relief. Not electing lets you carry forward the loss under the standard rules.

The law

  • Art 21, Federal Decree-Law 47 of 2022: Certain reliefs and loss relief are not available in an SBR period
  • Art 37, Federal Decree-Law 47 of 2022: Losses carried forward can offset up to 75 percent of later taxable income

What it means for you

Example: a startup with AED 400,000 loss in 2026 expects big profits in 2028 above AED 3 million revenue. Filing a standard return for 2026 keeps that loss to offset up to 75 percent of 2028 taxable income. If profits will stay small and SBR will apply anyway, the loss may never be useful, so electing is simpler.

What to do

  1. Forecast the next three years.
  2. If you expect to exceed AED 3 million, keep the loss by filing a standard return.
  3. If not, elect SBR.
  4. Document the reason in your file.

We can do this for youCorporate Tax return with Small Business Relief for SMEs and freelancers with revenue up to AED 3 million: AED 2,250

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