Guide for Small Business Tax Preparation In 2025

If you own a small business in the UAE, filing taxes might seem like a big task, but it doesn’t have to be. With the introduction of corporate tax, it’s now more important than ever to understand the basics of small business tax preparation. Whether you’re running a home-based business, a startup, or a freelance gig, understanding how to file a tax return for a small business is crucial for avoiding mistakes and staying compliant.

This blog will guide you through the entire process of small business tax filing in 2025. From understanding who needs to file, to preparing your records, calculating tax, and submitting your return, we’ve covered it all in simple steps. So, if you’re worried about filing taxes with a small business, this guide will help you get it right and file with confidence.

What Is Corporate Tax in the UAE?

Corporate Tax in the UAE is a direct tax imposed on the net income or profit of companies and other business entities. Introduced by the UAE government, it came into effect on June 1, 2023, to align with international tax standards and diversify the country’s revenue sources.

Key Features of Corporate Tax in UAE:

• Standard Rate: 9% on taxable income exceeding AED 375,000.
• 0% Tax Rate: For taxable income up to AED 375,000 (to support small businesses and startups).
• Scope: Applies to all businesses and commercial activities in the UAE, including those in free zones (with exceptions and incentives if they meet certain conditions).
• Exemptions: Includes government entities, qualifying public benefit entities, and certain extractive businesses.
• Filing Requirement: Companies must file a corporate tax return annually, even if they are eligible for a 0% tax rate.

Purpose:

The UAE introduced corporate tax to: 

• Strengthen the country’s position as a global business hub.
• Comply with OECD’s global minimum tax rules.
• Reduce reliance on oil and diversify the economy.

Do Small Businesses in UAE Need to File Corporate Tax?

Yes, small businesses in the UAE are required to file a corporate tax return, even if they don’t have to pay any tax due to their low income. According to the UAE Corporate Tax Law, businesses with an annual taxable income of up to AED 375,000 are exempt from tax. However, they must still complete the necessary small business tax preparation and comply with reporting requirements.

Whether you’re a sole proprietorship, an SME, or operating under a trade license, you must file a tax return for your small business each financial year. This helps maintain compliance and ensures your company remains in good standing with the Federal Tax Authority (FTA).

So, if you’re filing taxes on a small business in the UAE, make sure to keep accurate financial records and submit your tax return on time—even if you qualify for the 0% rate under the small business relief provision.

What Qualifies as a ‘Small Business’ under UAE Corporate Tax Rules?

Under UAE Corporate Tax rules, a small business is generally defined as a business whose revenue does not exceed AED 3 million in a tax year. This threshold applies from June 1, 2023, to December 31, 2026, and businesses meeting this condition can elect to receive Small Business Relief under the law.

If your business qualifies, you can benefit from simplified small business tax preparation and may not have to calculate or pay corporate tax on your profits. However, you’re still required to file a tax return for your small business with the Federal Tax Authority (FTA) each year.

Whether you’re filing taxes on a small business or just starting your journey, it’s essential to maintain proper financial records. Even with Small Business Relief, small business tax filing remains a legal obligation. When filing taxes for a small business, be sure to follow the correct procedures to stay compliant and avoid penalties.

Revenue Thresholds, Exemptions & 0% Tax Bracket under UAE Corporate Tax

Understanding the revenue limits and exemptions is crucial for accurate small business tax preparation in the UAE. Here’s a clear breakdown:

1. Revenue Thresholds

• Businesses with revenue up to AED 3 million per year (for tax periods from June 1, 2023, to December 31, 2026) may qualify for Small Business Relief.
• This allows eligible businesses to be treated as if they have no taxable income—greatly simplifying small business tax filing.

2. 0% Tax Bracket

• If your taxable income is up to AED 375,000, you fall under the 0% corporate tax rate.
• You still need to file a tax return for your small business, even if you owe no tax. This is a legal requirement under UAE Corporate Tax law.

Exemptions

The following are exempt from filing and paying corporate tax:

• Government entities and government-controlled entities.
• Extractive businesses (oil & gas, etc.) that meet exemption conditions.
• Certain qualifying free zone businesses (if they meet substance and activity requirements).
• Charities and public benefit organisations approved by the Cabinet.

Even if you qualify for exemptions or the 0% rate, you’re still responsible for filing taxes on a small business and keeping proper records. Being compliant not only avoids penalties but also strengthens your business credibility with banks and investors.

Important CT Filing Deadlines for 2025

Here are the important Corporate Tax (CT) filing deadlines in the UAE for 2025, based on your financial year-end. Every taxable person must file their CT return within nine months after their financial year closes (and pay any tax due in the same timeframe):

Additional reminders related to deadlines in 2025:

• Natural persons (e.g., freelancers/sole proprietors) whose business turnover exceeded AED 1 million during 2024 must register by 31 March 2025.
• Entities with short financial periods (e.g., those incorporated or liquidated before February 29, 2024) had extended deadlines for filing by December 31, 2024.

Why These Deadlines Matter

Missing these deadlines can result in penalties, including AED 500 for late filing and up to AED 20,000 for extended non-compliance. Staying on top of these dates ensures compliance, avoids fines, and facilitates the smooth filing of taxes for a small business in the UAE.

How to Prepare Your Corporate Tax Filing in the UAE?

Filing taxes on a small business in the UAE doesn’t have to be complicated. Follow these simple steps to stay compliant, avoid penalties, and make your small business tax preparation process smooth and stress-free.

Step 1: Determine if Your Business Needs to File

Before starting your small business tax preparation, check if your company is required to file for corporate tax. In the UAE, all resident businesses are required to register for corporate tax, unless they are specifically exempt.

If your business earns less than AED 3 million annually, you may qualify for Small Business Relief and benefit from a 0% corporate tax rate. However, even if you’re eligible for this relief, you’re still required to file a return with the FTA.

Step 2: Register for Corporate Tax on EmaraTax

The next step is to register your business on the EmaraTax portal. The Federal Tax Authority manages this online platform and is where you’ll complete all your corporate tax-related filings.

Registration is mandatory and must be done before your tax return due date. This is a key part of small business tax filing in the UAE.

Step 3: Organise and Maintain Financial Records

Good bookkeeping is essential for filing taxes with a small business. Ensure your financial records are up-to-date and accurate.

This includes tracking your income, expenses, invoices, payroll, and other transactions. Keeping clear records helps ensure that your tax calculations are correct and can be easily verified if the FTA requests supporting documentation.

Step 4: Calculate Your Taxable Income

To file your tax return for a small business, calculate your taxable income by subtracting allowable business expenses from your gross revenue. If your net taxable income is below AED 375,000, you fall under the 0% tax bracket.

If it exceeds AED 375,000, you’ll need to pay 9% tax on the amount above that threshold. This step is crucial for determining the exact amount of corporate tax your business is liable for.

Step 5: Prepare and Submit the Corporate Tax Return (CTTR)

Once your financial data is ready and your taxable income is calculated, log into the EmaraTax portal and fill out the Corporate Tax Return (CTTR) form.

This is where you officially declare your income, claim any reliefs or deductions, and report your final tax amount. This step is the core of filing taxes for small businesses in the UAE.

Step 6: File Your Return Within the Deadline

The deadline to file your corporate tax return is within 9 months from the end of your financial year. For example, if your financial year ends on December 31, 2024, your return must be filed by September 30, 2025. Missing this deadline can result in penalties, so timely filing is essential.

Step 7: Pay Any Tax Due

If your business is liable for corporate tax, the payment must be made through the EmaraTax portal before the filing deadline. Ensure your tax liability is settled on time to avoid fines or interest charges.

Step 8: Keep Supporting Documents Ready

Lastly, after you’ve filed your tax return, keep all supporting documents—like invoices, receipts, and bank statements—ready and accessible. The FTA may request these records for verification. Proper documentation not only protects your business during audits but also helps with future filings.

Mistakes to Avoid When Filing as a Small Business

Filing taxes on a small business can be overwhelming, especially if you’re doing it for the first time. Many business owners rush through the process or overlook key details, which can lead to errors that result in penalties, audits, or missed opportunities for savings.

Here are some common mistakes to avoid during your small business tax preparation and small business tax filing in the UAE:

1. Missing the Filing Deadline

One of the most common and costly mistakes is missing the corporate tax return deadline. UAE businesses must file their tax return within 9 months from the end of their financial year.

Late filing can lead to fines, even if your small business qualifies for the 0% tax bracket. Always mark your calendar and prepare in advance.

2. Not Keeping Proper Financial Records

Accurate bookkeeping is the foundation of good small business tax preparation. Failing to track income, expenses, or invoices properly can result in incorrect filings. Without organised records, you also risk non-compliance if the Federal Tax Authority (FTA) requests proof during an audit.

3. Assuming You Don’t Need to File

Even if your business revenue is below AED 3 million and you’re eligible for Small Business Relief, you still need to file a tax return. Many entrepreneurs believe they’re exempt and skip this step, which could result in penalties or complications later on.

4. Overlooking Allowable Deductions

When you file a tax return for your small business, it’s essential to claim all eligible business expenses. Failing to do so can result in an unnecessary increase in your taxable income. Work with an accountant or advisor to ensure you’re taking advantage of all legal deductions available.

5. Filing Incorrect or Incomplete Information

Submitting incorrect financial data, using outdated figures, or skipping required fields are common issues when filing taxes for a small business. Always double-check your entries and review your financial statements before submission. Even simple mistakes can delay your tax processing or lead to rejection.

6. Not Consulting a Tax Professional

Trying to handle everything yourself may seem cost-effective, but corporate tax law in the UAE can be complex and challenging. If you’re unsure about any step, working with a tax advisor can help you stay compliant and avoid costly errors during small business tax filing.

Penalties for Late or Incorrect Corporate Tax Filing

Non-compliance with UAE Corporate Tax regulations can lead to significant financial consequences:

• AED 10,000 penalty for not registering on time
• AED 500 per month, accumulating, for delayed tax return submissions
• AED 1,000 or more for not maintaining accurate financial records
• Up to AED 50,000 for providing false information or attempting tax evasion
• Interest charges apply on unpaid taxes from the due date until settlement

Note: It’s essential to stay compliant to avoid these escalating penalties.

Make Small Business Tax Filing Easy with Shuraa Tax

Preparing and filing taxes on a small business doesn’t have to be stressful. With proper planning, clear financial records, and timely submissions, tax preparation for small businesses becomes manageable and straightforward.

Remember, even if your business qualifies for the 0% tax rate or Small Business Relief, you still need to file a return. Avoid mistakes, stay informed about UAE tax rules, and don’t hesitate to ask for help when needed.

If you’re unsure how to file a tax return for your small business or need guidance, Shuraa Tax is here to support you every step of the way.

📞 Call: +(971) 44081900
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📧 Email: info@shuraatax.com