Small Business Relief in the UAE: who qualifies and how long it lasts

Small Business Relief now lasts until tax periods ending on or before 31 December 2029. Ministerial Decision No. 131 of 2026, signed on 29 July 2026, moved the end date back by three years; before that, the relief was due to stop with periods ending in 2026. If your revenue is AED 3 million or less, and has never been above it, you can keep electing for the relief in each corporate tax return until then.

Everything else in Ministerial Decision No. 73 of 2023, which created the relief, is unchanged: the revenue limit, the exclusions and the rules on losses. Some FTA material published before August 2026 still refers to 31 December 2026, so don't be thrown by older documents. This is general information, not tax advice.

How long does Small Business Relief last?

The Ministry of Finance announced the extension on 7 August 2026. The new decision replaces a single clause of the 2023 decision and took effect the day after publication. The relief now applies to tax periods that start on or after 1 June 2023 and end on or before 31 December 2029.

The cut-off depends on when a tax period ends, so a company with a non-calendar financial year loses up to nine months of relief compared with a calendar-year company:

This assumes you keep meeting the conditions and the date isn't extended again. Changing your tax period needs an application to the FTA, so look at this table before you ask for one.

For a business that will stay small, the extension means three more years of the simplest corporate tax position available: no tax computation, a simplified return and, if you want, cash-basis accounts.

Who qualifies?

You can elect for Small Business Relief for a tax period if all of these are true:

• you are a taxable person and a resident person for corporate tax, whether a company or an individual
• your revenue is AED 3 million or less for that tax period and for every tax period before it
• you are not a Qualifying Free Zone Person
• you are not part of a multinational group with consolidated revenue above AED 3.15 billion

Individuals only come into corporate tax once their business turnover passes AED 1 million in a calendar year. Salary, personal investment income and real-estate investment income don't count toward that figure. The AED 1 million registration test and the AED 3 million relief test are separate.

How do you elect for it?

The relief is never automatic. The steps are:

1. Register for corporate tax. You can't elect without a registration. Our guide to corporate tax deadlines and penalties covers when to register and what lateness costs.
2. Keep records for the period. Records must be kept for seven years. Cash-basis accounts are allowed while revenue stays at or under AED 3 million.
3. Elect in the tax return. Choosing the relief gives you a simplified return with less information to report.
4. File within nine months of the period end. Electing is not an exemption from filing. The FTA repeated this in August 2026, ahead of the 30 September deadline for 2025 calendar-year returns.
5. Repeat every period. The election applies only to the period of the return, so the revenue test is checked again each year.

Why the AED 3 million test is stricter than it looks

Three features of the test catch people out.

It is revenue, not profit. Revenue means the gross income of the period. A business with AED 3.2 million of sales and a loss still fails the test.

Other income counts too. The FTA's guide says revenue includes all gross income, not just sales; selling an asset is one of its examples. Say your trading company has AED 2.8 million of sales and also earns AED 250,000 in rent from a warehouse unit it owns. Revenue for the period is AED 3.05 million, and the relief is gone.

One bad year ends it permanently. The test covers the current period and every earlier one. The FTA's own example is a person with revenue of AED 4.3 million in 2025 who can't elect for 2026, even though 2026 revenue was AED 1.9 million. The extension doesn't change that.

What you give up by electing

Electing treats you as having no taxable income for the period. For a small, profitable business that is usually the right answer, but it has a price:

• Losses are thrown away. A tax loss made in a period where you elect can't be carried forward. Losses from earlier periods where you didn't elect are kept for later periods where you don't elect.
• Interest is treated the same way. Net interest expenditure in a relief period can't be carried forward either.
• No exemptions, reliefs or deductions. They don't apply in a relief period.
• Arm's length pricing still applies. You don't need transfer pricing documentation, but dealings with related parties, including you as the owner, must still be priced as if between independent parties.

The loss rule is where judgement comes in. Say a start-up makes a tax loss of AED 400,000 in 2026 and expects revenue to pass AED 3 million in 2028. Electing for 2026 saves no tax, because there is none to pay in a loss year, and it throws away a loss that could reduce the tax bill from 2028. Run both versions before you file.

Splitting a business to stay under the limit

Running two genuine businesses through two companies is fine. Splitting one business so that each part stays under AED 3 million is not. The FTA calls this artificial separation and treats it as an arrangement to obtain a tax advantage under the general anti-abuse rule. Its guide describes three forms:

• Functional: separating parts of one operation, such as food and drinks sales in the same restaurant.
• Geographical: a separate company for each branch of what is really one chain.
• Temporal: closing one company as it nears the limit and carrying on through a new one.

The FTA asks whether there was a valid commercial reason and whether the entities carry on substantially the same business, looking at their financial, economic and organisational links. If it concludes the business was split artificially, the relief is denied, the tax that would have been due must be paid, and a penalty may follow.

What to do now

1. Check your revenue history. Pull the revenue for every tax period since your first. If any period went over AED 3 million, the relief is closed to you.
2. Settle the loss question before you file. If you have a loss you will want later, consider not electing for that period.
3. Free zone companies: compare the options. A Qualifying Free Zone Person can't use the relief. For some small free zone businesses, the standard regime with Small Business Relief is simpler than chasing the 0% rate. Our guide to qualifying income for free zone companies explains the trade-off.
4. Plan for 2030. Unless the relief is extended again, tax periods ending after 31 December 2029 will need a full tax computation. A business that has run on cash accounting for years will need time to switch, and our guide to bookkeeping and audit requirements covers what proper records look like.

For rates and registration basics, start with our UAE corporate tax guide. If you are setting up and want tax built into the structure from day one, our business setup team can help, or you can book a free consultation to talk it through.

Sources

• Ministry of Finance: Small Business Relief extended until 31 December 2029 (August 2026)
• Ministerial Decision No. 131 of 2026 amending Ministerial Decision No. 73 of 2023
• Ministerial Decision No. 73 of 2023 on Small Business Relief
• Federal Tax Authority: Small Business Relief
• Federal Tax Authority: Corporate Tax Guide on Small Business Relief (CTGSBR1)
• Federal Tax Authority: Small Business Relief taxpayers must file simplified returns on time (August 2026)