Insights · UAE Tax
UAE Small Business Relief Extended to 2029: Who Qualifies and How to Elect
UAE Small Business Relief lets a resident business elect to be treated as having no taxable income. To qualify, its revenue must be AED 3 million or less in the current tax period and in every previous one. Ministerial Decision No. 73 of 2023 originally covered only tax periods ending by 31 December 2026. Ministerial Decision No. 131 of 2026, announced on 7 August 2026, extends the relief to tax periods ending on or before 31 December 2029. The threshold and conditions are unchanged.
For owner-managed companies, start-ups and sole traders in the UAE, Small Business Relief can mean no corporate tax at all. This guide covers the revenue test, the exclusions, what you give up by electing, the anti-abuse rule and how to plan for the new end date.
| Rule | Position at 30 September 2026 |
|---|---|
| Legal basis | Article 21 of Federal Decree-Law No. 47 of 2022; Ministerial Decision No. 73 of 2023 |
| Revenue test | AED 3 million or less in the current tax period and every previous tax period |
| Periods covered | Tax periods starting on or after 1 June 2023 and ending on or before 31 December 2029 |
| Cannot elect | Qualifying free zone persons; members of multinational groups with consolidated revenue above AED 3.15 billion |
| How to claim | Elect in the corporate tax return on EmaraTax, for each tax period |
| Losses and interest | Tax losses and disallowed net interest expenditure from relief years cannot be carried forward |
| Transfer pricing | No disclosure form, master file or local file; the arm’s length principle still applies |
| Still required | Registration, a simplified return within 9 months and records kept for 7 years |
Who Qualifies, and What Changed in August 2026
Article 21 of the Corporate Tax Law allows a resident person, whether a company or an individual in business, to elect to be treated as having derived no taxable income. Ministerial Decision No. 73 of 2023 sets the revenue threshold at AED 3 million, measured under the accounting standards accepted in the UAE. The test looks at revenue, not profit, and it looks back. According to the Federal Tax Authority, revenue must not exceed AED 3 million in the relevant tax period or in any previous tax period. A single year above the line ends eligibility for every later year.
The original decision limited the relief to tax periods ending on or before 31 December 2026. Ministerial Decision No. 131 of 2026 was issued on 29 July 2026 and announced by the Ministry of Finance on 7 August 2026. It extends the relief to tax periods ending on or before 31 December 2029. The AED 3 million threshold, the conditions and the exclusions are unchanged. For a calendar-year business, 2029 is now the last year covered. After that, unless the relief is extended again, the standard rates apply: 0% on taxable income up to AED 375,000 and 9% above it.
Two groups cannot elect at all. The first is qualifying free zone persons, who have their own 0% regime for qualifying income. The second is constituent companies of multinational enterprise groups with consolidated group revenue above AED 3.15 billion. On 3 August 2026, the FTA reminded businesses that eligibility does not remove the duty to register, file on time and keep documents showing that revenue stayed within the threshold in every period. Businesses that elect file a simplified return.
What You Give Up by Electing, and the Anti-Abuse Rule
The relief is not automatic. You elect in the corporate tax return, one tax period at a time. Once you elect, Article 21 switches off the law’s rules on exempt income, reliefs, deductions and tax losses, and the transfer pricing documentation rules in Article 55. Under Articles 4 and 5 of Ministerial Decision No. 73, tax losses and disallowed net interest expenditure incurred in a relief year cannot be carried forward. Losses and disallowed interest from earlier years in which you did not elect can still be used in later years in which you do not elect.
That makes the election a real decision for loss-making start-ups. The law lets tax losses offset up to 75% of taxable income in later years, and those losses are forfeited if you elect in the year they arise. A business that expects to cross AED 3 million, or to make profits well above AED 375,000 once the relief ends, may be better off not electing in its loss years. A business with small, steady profits pays 0% on its first AED 375,000 anyway. For that business, the main benefit of electing is the lighter return and the lack of transfer pricing paperwork.
Article 6 of the decision deals with artificial separation. Splitting a business into several entities so each stays under AED 3 million is treated as an arrangement to obtain a corporate tax advantage. The general anti-abuse rule in Article 50 of the law then applies. The FTA’s guide says such taxpayers must repay the corporate tax due and may face administrative penalties. Under Cabinet Decision No. 75 of 2023, a tax difference found in an audit attracts a 15% fixed penalty plus 1% a month.
Planning Checklist Before the Relief Ends in 2029
- Check your revenue for every tax period since your first one starting on or after 1 June 2023. A single breach of AED 3 million ends eligibility for good.
- Measure revenue under the accounting standards you report under. Do not rely on moving invoices between years to stay under the line.
- Decide each year whether to elect, weighing any losses you would forfeit against the simpler return.
- If you run several entities, record the commercial reason for each one so the structure does not look like artificial separation.
- Keep revenue records, invoices and bank statements for seven years, and file within nine months of each period end.
- If you are in a free zone, confirm whether you are a qualifying free zone person. If you are, you cannot elect.
- Model your tax at 9% on taxable income above AED 375,000 for the first tax period ending after 31 December 2029, and budget for it now.
Frequently asked questions
Has UAE Small Business Relief been extended beyond 2026?
Yes. Ministerial Decision No. 131 of 2026, announced by the Ministry of Finance on 7 August 2026, extends Small Business Relief to tax periods ending on or before 31 December 2029. The AED 3 million revenue threshold and the other conditions are unchanged. For a calendar-year business, 2029 is the last year currently covered. After that, unless the relief is extended again, taxable income above AED 375,000 is taxed at 9%.
What happens if my revenue goes above AED 3 million?
You lose Small Business Relief for that tax period and for every later period. To qualify, revenue must be AED 3 million or less in the current period and in every previous one. From then on you file a full corporate tax return, paying 0% on the first AED 375,000 of taxable income and 9% above it. Losses incurred in years when you elected the relief cannot be carried forward.
Can a free zone company claim Small Business Relief?
Not if it is a qualifying free zone person. Ministerial Decision No. 73 of 2023 excludes qualifying free zone persons, as well as members of multinational groups with consolidated revenue above AED 3.15 billion. Any free zone company claiming the relief must be a resident person, meet the AED 3 million revenue test in every period and make the election in its return. Take advice before choosing between the two regimes.
Do I still need to file a corporate tax return if I claim Small Business Relief?
Yes. You must be registered for corporate tax, and the relief is claimed by electing in the return itself, filed on EmaraTax within nine months of the tax period end. Electing businesses file a simplified return, and the Federal Tax Authority expects them to keep records proving revenue stayed within AED 3 million. Late filing costs AED 500 a month for the first year and AED 1,000 a month after that.