On 29 July 2026 the Ministry of Finance issued Ministerial Decision No. 131 of 2026, amending Ministerial Decision No. 73 of 2023 on Small Business Relief. The amendment does one thing. It moves the last eligible tax period from 31 December 2026 to 31 December 2029 [1][6].
If you have read anywhere that 2026 is the final year of Small Business Relief, that statement is now false. A great deal of published UAE tax content still says it, because it was correct until late July. Until the amendment, every serious piece of UAE tax planning treated 2026 as the closing year, and founders were being advised to bring forward revenue recognition or to price the 9% rate into 2027 contracts. All of that was correct on the facts as they stood. Most of it now needs redoing.
The extension is also easy to over-read. The AED 3,000,000 revenue threshold is unchanged. The exclusions are unchanged. The election requirement is unchanged. What you give up by claiming the relief is unchanged. The anti-abuse rule is unchanged. If you were not eligible on 28 July 2026, you are not eligible now.
Since 2013, BusinessDubai.ae has registered UAE companies and handled the Corporate Tax registration, election and filing that follow. This guide sets out what Ministerial Decision 131 altered, what it left alone, what four eligible periods are worth in AED, and who should genuinely re-plan.
What actually changed on 29 July 2026?
Short answer: one clause, and only one. The end date moved from 31 December 2026 to 31 December 2029.
Ministerial Decision No. 73 of 2023 set the Small Business Relief revenue threshold at AED 3,000,000 and limited availability to tax periods ending on or before 31 December 2026 [2]. Ministerial Decision No. 131 of 2026 amends that provision so the same threshold now applies to tax periods ending on or before 31 December 2029 [1].
The Ministry framed the amendment as support for start-ups and small businesses and as reinforcement of the UAE's position as an investment destination [6]. In practical terms it converts the relief from a closing window into a medium-term feature of the regime.
For a business on a calendar-year tax period, the arithmetic is straightforward.
| Tax period ending | Position before MD 131 | Position after MD 131 |
|---|---|---|
| 31 December 2026 | Eligible | Eligible |
| 31 December 2027 | Not eligible | Eligible |
| 31 December 2028 | Not eligible | Eligible |
| 31 December 2029 | Not eligible | Eligible |
| 31 December 2030 | Not eligible | Not eligible |
A company incorporated in 2026 that expects revenue to stay under AED 3 million therefore moves from one eligible period to four. That is the whole of the change, and for a small consultancy or agency it is the difference between planning around a cliff and planning around a threshold.
Real Talk: The most valuable thing about this amendment is not the tax saved. It is that the relief stops being a reason to make a structural decision in a hurry. A founder about to restructure in late 2026 to beat a deadline now has three more years to decide on the merits, and deadline-driven structuring is where most expensive UAE tax mistakes come from.
What did not change?
Short answer: everything else, and the coverage of the amendment has tended to imply otherwise.
It is worth being blunt, because several summaries describe the change as though the relief itself were widened. It was not.
The threshold is still AED 3,000,000. Not indexed to inflation, not adjusted, not AED 3.15 billion. That larger figure belongs to the multinational group exclusion, and confusing the two is one of the most common errors we see. The threshold is the same AED 3,000,000 that applied from 2023 [2][3].
The exclusions are still the exclusions. A Qualifying Free Zone Person cannot elect Small Business Relief, and neither can a member of a multinational enterprise group with consolidated group revenue above AED 3.15 billion [3][4].
It is still an election, not a default. You receive Small Business Relief because you claimed it on your Corporate Tax return for that period, and you must claim it again for each period you want it [3].
You still register and you still file. The relief removes taxable income, not your place in the Corporate Tax system, and the return remains due within nine months of the end of your tax period [4][8].
What you give up is still what you gave up. Electing switches off other exemptions, reliefs and deductions for that period [3], and for some businesses that is the reason not to elect.
The anti-abuse rule is still there. Artificially separating a business to keep two revenue figures under AED 3 million engages the general anti-abuse rule in Article 50 of the Corporate Tax Law [4][5].
Not sure whether your structure can elect the relief at all? Check your eligibility→
Who can claim Small Business Relief, and who cannot?
Short answer: any Resident Person under AED 3,000,000 of revenue in this and every previous period, except a Qualifying Free Zone Person or a member of a very large multinational group.
Small Business Relief sits in Article 21 of Federal Decree-Law No. 47 of 2022, which allows a Resident Person to be treated as having derived no taxable income for a tax period where revenue does not exceed a threshold set by the Minister [5]. Ministerial Decision 73 of 2023 sets that threshold and the conditions [2].
You can elect if you are:
- A Resident Person for Corporate Tax purposes. This covers both juridical persons, meaning companies, and natural persons carrying on a business in the UAE [3].
- Below AED 3,000,000 of revenue in the relevant tax period and in every previous tax period [3].
You cannot elect if you are:
- A Qualifying Free Zone Person. If you hold QFZP status and are enjoying 0% on qualifying income, the relief is closed to you [3][4]. This is not a penalty. You are already on a 0% rate for the income that qualifies.
- A member of a multinational enterprise group with consolidated group revenue above AED 3.15 billion [3][4]. This is the Pillar Two population and it is irrelevant to almost every business reading this.
The Qualifying Free Zone Person exclusion causes the most confusion in practice, so it is worth being precise. Being in a free zone does not exclude you. Being a Qualifying Free Zone Person does. A free zone company that does not meet the qualifying conditions is an ordinary taxable person and can claim the relief like any mainland company. Our free zone company setup page covers which structures realistically reach QFZP status, and our guide to the Qualifying Free Zone Person 0% rate sets out the qualifying and excluded activity tests.
Common Mistake: Assuming a free zone licence automatically means QFZP status, and therefore assuming Small Business Relief is unavailable. In our experience a large share of small free zone companies never realistically qualify for the 0% regime, because their income is not qualifying income, or because they sell into the mainland or to UAE consumers, which is generally an excluded activity. Those companies are ordinary taxable persons and the extension is good news for them.
How is the AED 3 million revenue threshold actually measured?
Short answer: on revenue rather than profit, under IFRS or UAE GAAP, and across the current tax period and every previous one.
This is where businesses get caught, and the extension does nothing to soften it.
It is revenue, not profit. A consultancy billing AED 2.9 million with AED 2.4 million of costs is comfortably inside. A trading company turning over AED 8 million on a 4% margin is outside, despite earning far less. The test ignores profitability, which is why low-margin traders are usually outside the relief and high-margin service businesses are usually inside it.
It is measured under IFRS or UAE GAAP, based on your financial statements [4]. You cannot adopt a cash-basis view of revenue for convenience if your statements are prepared on an accruals basis, which matters for businesses with long project cycles.
It applies to the current period and all previous ones. This is the clause that surprises people. If revenue exceeded AED 3,000,000 in an earlier tax period, the relief is not available in a later period even if revenue falls back below the threshold [3]. It is not a rolling annual test you can dip in and out of. Cross the line once and the door closes.
| Revenue pattern by period | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|
| Revenue (AED millions) | 2.4 | 3.4 | 2.6 | 2.2 |
| Relief available? | Yes | No | No | No |
That table is the single most expensive thing in this guide. A business that grows through the threshold once has closed every later period, including periods where revenue falls back. Under the old rules that cost one remaining period. Under the extended rules it can cost three.
Quick Math: Take a business at AED 2.9 million of revenue and AED 700,000 of taxable profit, considering a contract worth AED 200,000 that would tip revenue to AED 3.1 million. Accepting it removes the relief for that period and for 2028 and 2029. If profit stays around AED 700,000, the standard regime costs 9% of AED 325,000, which is AED 29,250 a period, or AED 87,750 across three periods. The AED 200,000 contract needs to be worth more than that at the margin, and often it is. The point is not to refuse the work. The point is to price it knowing the number.
What do you give up when you elect the relief?
Short answer: other exemptions, reliefs and deductions are switched off for that period, which costs most small businesses nothing and costs loss-making ones something real.
Electing Small Business Relief means you are treated as having derived no taxable income for that period. In exchange, other exemptions, reliefs and deductions are not available to you for that period [3].
For most businesses under AED 3 million this costs nothing, because a company with no taxable income has no use for a deduction. There are two situations where it is not free.
You have losses you would rather bank. Tax losses arising in a period where you elect the relief cannot be used in that period. They are carried forward rather than extinguished [4], but a loss-making year spent inside the relief is a year those losses did nothing.
You have disallowed net interest expenditure. The same logic applies. It carries forward rather than disappearing [4], but it sits idle while you are electing.
Nothing is forfeited either way. A business with a AED 400,000 loss in its first period that elects the relief keeps that loss, but if it also elects in 2027, 2028 and 2029, the loss is not usable until the period ending in 2030 at the earliest. That is a deferred benefit rather than no benefit, and it should be priced into a model rather than treated as an asset available next year.
The practical rule is simple. If you are profitable and under the threshold, elect. If you are loss-making, model whether you are better off outside the relief, and take advice before you file.
One more consequence is worth knowing. Transfer pricing documentation is not required while you elect, but the arm's length principle still applies to related-party transactions [3]. The documentation obligation is relaxed. The standard is not. Our UAE transfer pricing guide covers what that requires of a small group with intercompany charges.
Pro Tip: Make the elect or do not elect decision after your financial statements are prepared, not before. The relief is claimed on the return, and the return follows the accounts. Deciding in advance that you will always elect is fine for a consistently profitable business and wrong for one with a loss-making year mid-growth.
What are four eligible periods actually worth in AED?
Short answer: for a typical small UAE company, somewhere between nothing and roughly AED 400,000 across the four periods, and for most it is tens of thousands rather than hundreds.
The standard regime is 0% on the first AED 375,000 of taxable income and 9% above it [8]. So the practical effect of Small Business Relief is narrower than it first appears. It removes the 9% on the slice of profit above AED 375,000, up to the point where revenue reaches AED 3 million.
| Taxable profit per period (AED) | Tax under standard rates (AED) | Saved per period with relief (AED) | Saved across four periods (AED) |
|---|---|---|---|
| 200,000 | 0 | 0 | 0 |
| 375,000 | 0 | 0 | 0 |
| 500,000 | 11,250 | 11,250 | 45,000 |
| 600,000 | 20,250 | 20,250 | 81,000 |
| 750,000 | 33,750 | 33,750 | 135,000 |
| 1,000,000 | 56,250 | 56,250 | 225,000 |
| 1,500,000 | 101,250 | 101,250 | 405,000 |
Read the top two rows carefully. A business earning AED 375,000 or less of taxable profit saves precisely nothing, because the standard regime already charges it 0%. It still benefits from the simplified return, and it must still register, file and elect. But the cash saving is zero.
Quick Math: The founder profile where the extension is genuinely material is a high-margin service business. A two-person consultancy on AED 1.8 million of revenue and AED 1 million of taxable profit saves AED 56,250 a period. Across the four eligible periods that is AED 225,000, which is real money for a business of that size, and it is money that arrives without any structuring, any free zone, and any substance requirement. It arrives because you filed a return and ticked a box.
That framing matters because the relief should not drive your structure. It should not be the reason you choose one licence over another, delay hiring, or turn down work that would push you over AED 3 million. A business that suppresses AED 500,000 of revenue to protect AED 20,000 of tax has made a bad trade.
Do you still have to register and file?
Short answer: yes, and this is the single most common misunderstanding we correct.
Small Business Relief removes taxable income. It does not remove you from the Corporate Tax system. You must be registered, and you must file a Corporate Tax return for the period in which you claim it, because the election is made on that return [3][4]. A simplified return is available to businesses claiming the relief, which is part of the compliance-cost reduction the relief is designed to deliver [4].
The deadline is nine months from the end of the tax period, for both the return and any payment [8]. On a calendar-year business that produces a clean schedule.
| Tax period ending | Return and election due by | Position if you elect |
|---|---|---|
| 31 December 2026 | 30 September 2027 | Nil taxable income |
| 31 December 2027 | 30 September 2028 | Nil taxable income |
| 31 December 2028 | 30 September 2029 | Nil taxable income |
| 31 December 2029 | 30 September 2030 | Nil taxable income |
| 31 December 2030 | 30 September 2031 | Standard regime, 0% to AED 375,000 then 9% |
Businesses that assume no tax due means nothing to do accumulate late-registration and late-filing exposure while believing they are compliant.
Real Talk: The extension will make this error more common, not less. Four periods of nil taxable income is four opportunities to quietly not file, and each one feels harmless because nothing is owed. The obligation is procedural and it does not care that your result is nil. If you take one operational point from this guide, make it this one: put the nine-month deadline in a calendar for every period through to 2030 today.
Our post-setup services team handles registration, the election and the filing as one workflow, because the three are easy to separate and expensive to get wrong. Our UAE corporate tax filing guide covers the return, and our EmaraTax portal guide covers where the election appears on screen.
Want the registration, the election and four years of filings handled rather than remembered? Talk to a setup expert→
Can you split your business to stay under AED 3 million?
Short answer: no, and the attempt is specifically anticipated by the anti-abuse rule.
Where the Federal Tax Authority establishes that a person has artificially separated a business or business activity, and the total revenue of the whole business exceeds AED 3 million in a tax period, and the separated parts have elected Small Business Relief, that is treated as an arrangement to obtain a Corporate Tax advantage under the general anti-abuse rule in Article 50 of the Corporate Tax Law [4][5].
In plain terms, incorporating a second company to move AED 1.5 million of revenue off the books of the first, where there is no commercial substance to the split, is the exact fact pattern the rule targets.
This does not mean multiple companies are prohibited.
| Reason for a second entity | Commercially genuine? | Comment |
|---|---|---|
| Different regulated activity requiring its own licence | Yes | Licensing constraint, not tax planning |
| Different partners or shareholders in each business | Yes | Ownership drives the structure |
| Separating a trading arm from an operating arm | Yes | Common risk management |
| Holding intellectual property or assets separately | Yes | Structural, with its own substance |
| A second company invoicing the same clients for the same work | No | This is the pattern Article 50 targets |
| Splitting one contract across two entities to sit under a threshold | No | No commercial purpose beyond the threshold |
The distinction is purpose and substance, not the number of entities. Our guide to running two businesses in Dubai sets out the structures that hold up, and our offshore company formation page covers where a genuine holding entity fits into a group and where it does not.
Common Mistake: Treating the anti-abuse rule as something that only applies to elaborate schemes. It applies to the simplest version of the idea, which is the one small businesses actually reach for. Two companies, same owner, same clients, same office, revenue divided to keep both under AED 3 million. That is not a grey area.
The extension raises the stakes here rather than lowering them. Three additional eligible periods make an artificial split more tempting and more valuable, which is precisely why it is worth being clear that the anti-abuse rule did not change.
Should a free zone company care about this at all?
Short answer: it depends entirely on whether you are a Qualifying Free Zone Person, and most small free zone companies are not.
If you hold QFZP status, the relief is closed to you [3]. You are on 0% for qualifying income and 9% for the rest, and Small Business Relief is not an alternative you can switch to. Nothing in Ministerial Decision 131 changes that.
If you are a free zone company that does not meet the qualifying conditions, you are an ordinary taxable person and can elect on the same terms as a mainland company. That population is larger than most founders assume, because many free zone activities are not Qualifying Activities and selling to the mainland or to UAE consumers is frequently an Excluded Activity.
| Your position | Small Business Relief available? | Practical effect of MD 131 |
|---|---|---|
| Mainland company under AED 3m revenue | Yes, on election | Four eligible periods instead of one |
| Free zone company, not a QFZP, under AED 3m | Yes, on election | Four eligible periods instead of one |
| Free zone company holding QFZP status | No [3] | No change |
| Natural person carrying on a business in the UAE | Yes, on election | Four eligible periods instead of one |
| Member of an MNE group above AED 3.15bn | No [3][4] | No change |
For a small free zone company under AED 3 million that never realistically qualifies for the 0% regime, the extension is genuinely good news: four periods of nil taxable income rather than one. Our mainland company setup page covers the onshore route where free zone trading restrictions are the binding constraint.
Cost matters here too. If the relief means your tax outcome is nil either way, the sensible question becomes which licence is cheapest to hold and renew for four years, and our business setup in Ajman page covers one of the lower-cost emirate routes that frequently suits a business whose tax position is nil regardless.
Does Small Business Relief affect VAT?
Short answer: no. They are different taxes with different thresholds, and a business inside the relief can still be fully VAT registered.
This confuses more founders than it should, because both regimes have an AED 375,000 figure in them and they mean completely different things.
| Item | Corporate Tax | VAT |
|---|---|---|
| AED 375,000 | The 0% band of taxable income [8] | Mandatory registration threshold on taxable supplies and imports [9] |
| AED 187,500 | No meaning | Voluntary registration threshold on taxable supplies, imports or expenses [9] |
| AED 3,000,000 | Small Business Relief revenue threshold [3] | No meaning |
| Rate above threshold | 9% [8] | 5% [9] |
| Basis | Taxable income for the period | Taxable supplies and imports |
A consultancy on AED 1.2 million of revenue is well inside Small Business Relief and well over the VAT registration threshold. It pays no Corporate Tax and still charges, collects and remits 5% VAT on its normal cycle. Our VAT registration and compliance guide covers the mechanics.
Reading Small Business Relief as a general small business exemption from UAE taxation is a mistake. It is one relief, in one tax, claimed on one return. VAT, excise where relevant, employment obligations and licensing renewals are all untouched by it.
Who should re-plan because of the extension?
Short answer: five specific groups, and if you are not in one of them the correct response is to note the change and carry on.
Businesses that accelerated revenue into 2026. If you brought forward invoicing or delivery to capture the relief before it closed, that decision was made against a deadline that no longer exists. The pattern should not be repeated in 2027.
Businesses that decided against a simple structure on tax grounds. Some founders chose a free zone specifically to reach the 0% rate, having concluded the relief would run out. With four periods available, a simple mainland company under AED 3 million may now be cheaper and less demanding. QFZP status carries substance requirements, audited statements and activity restrictions. The relief carries an election and a simplified return.
Businesses that priced 9% into 2027 and 2028 contracts. If you quoted multi-year work assuming tax from 2027, your margin assumption is now conservative. A pleasant problem, but worth correcting before you repeat it.
Businesses on a non-calendar tax period. The cut-off is defined by when a tax period ends, not by the calendar year [1][2].
| Financial year end | Last eligible period before MD 131 | Last eligible period after MD 131 |
|---|---|---|
| 31 December | 31 December 2026 | 31 December 2029 |
| 31 March | 31 March 2026 | 31 March 2029 |
| 30 June | 30 June 2026 | 30 June 2029 |
| 30 September | 30 September 2026 | 30 September 2029 |
Businesses approaching AED 3 million. The extension makes the threshold more valuable, which makes crossing it more expensive. A business at AED 2.8 million now has a stronger reason to understand exactly which contracts tip it over and when, because breaching it removes not one period of relief but potentially three.
Pro Tip: Build the model on revenue by contract rather than revenue by month. Threshold breaches almost never happen gradually. They happen because one contract lands, and the useful question is which single piece of work moves you across the line.
What does this mean for a business incorporating in 2026?
Short answer: four periods of nil taxable income if you stay under AED 3 million and elect each time, moving to the standard regime for periods ending in 2030.
The practical sequence for a new company looks like this.
| Step | When | Notes |
|---|---|---|
| Incorporate and licence | Day one | Structure chosen on commercial merits, not on the relief |
| Register for Corporate Tax | After incorporation | Required regardless of expected liability [4] |
| Register for VAT if applicable | On crossing AED 375,000, or voluntarily above AED 187,500 [9] | Separate regime, unaffected by the relief |
| Prepare financial statements | After each period end | Revenue determined under IFRS or UAE GAAP [4] |
| File return and elect the relief | Within 9 months of period end [8] | The election is made on the return [3] |
| Repeat for each period to 2029 | Annually | Election does not carry forward [3] |
That sequence is the whole compliance shape of a small UAE company under the relief. It is not heavy, and it is exactly the part that gets skipped.
Want that four-year sequence run for you rather than remembered each August? Get a free consultation→
Real Client Stories
Real examples from businesses we have helped set up. Names have been changed for privacy.
Faisal, the consultant who restructured against a deadline that moved
Faisal ran a two-partner management consultancy on roughly AED 1.9 million of revenue. In early 2026 he was advised to convert to a free zone structure and pursue Qualifying Free Zone Person status, on the reasoning that Small Business Relief would end with the 2026 period and 9% would apply from 2027. The analysis was sound on the facts as they stood in March.
After the extension, the picture inverted. His advisory work is largely delivered to UAE mainland clients, which sits awkwardly with the qualifying and excluded activity tests, so QFZP status was never a comfortable fit. Four further periods of relief on a simple mainland licence is cheaper and lower risk than a free zone structure chasing a 0% rate he might not hold. On roughly AED 900,000 of taxable profit the relief is worth about AED 47,250 a period, with no substance test and no audited statements.
His comment: "We were about to spend money and effort restructuring to beat a date. The date moved, and the structure we already had turned out to be the right one."
Nadia, the agency owner who crossed the threshold and lost more than one year
Nadia's digital agency grew from AED 2.6 million to AED 3.4 million of revenue in a single period. Under the old rules that cost her the relief for one remaining period. Under the extended rules it costs the relief for three, because the threshold test looks at the current period and every previous one [3]. Once revenue has exceeded AED 3 million in any period, later periods are closed even if revenue falls back.
Nothing improper happened and the growth was right for the business. But the cost of crossing the line is now materially higher than it was in July. On roughly AED 800,000 of taxable profit the standard regime costs about AED 38,250 a period, or roughly AED 114,750 across the three periods she can no longer claim.
Her comment: "I knew the threshold existed. What I did not know was that going over it once shuts the door for good, not just for that year."
Rashid, the founder who thought no tax meant no filing
Rashid ran a single-owner e-commerce business under AED 1 million of revenue. He elected Small Business Relief in his first period and concluded that nil taxable income meant there was nothing further to do. There was. Registration and a return are still required, the return is due within nine months of the period end, and the election is made on the return rather than instead of it [3][4][8].
The exposure was administrative rather than substantive and it was resolved, but it was avoidable. This is the most common Small Business Relief error we see, and the extension will make it more common by increasing the number of periods in which someone can quietly fail to file.
His comment: "I had convinced myself that owing nothing and filing nothing were the same thing. They are not, and the relief is the exact thing you claim on the form you did not send."
Plan the next four years with the relief in writing
Ministerial Decision 131 of 2026 is a genuinely useful change for small UAE businesses, and it is being under-reported relative to its practical effect. Four eligible periods instead of one alters structure decisions, pricing decisions and hiring decisions for companies under AED 3 million.
What it does not do is widen who qualifies, soften how revenue is measured, or reduce what you give up in exchange. The threshold, the exclusions, the election requirement, the filing obligation and the anti-abuse rule are all exactly where they were on 28 July 2026.
Three actions are worth taking this month. Confirm your tax period end and write down your four eligible periods. Diarise the nine-month filing deadline for each. And if you are within AED 500,000 of the threshold, identify the contract that would take you over it, because that is now a three-period decision rather than a one-period one.
Since 2013, BusinessDubai.ae has handled UAE company registrations and the compliance that follows them, including Corporate Tax registration, the Small Business Relief election and the annual return. If you are deciding between structures, or you are close to AED 3 million and want to know what crossing it costs across four periods rather than one, we will model it against your actual numbers before you commit. Our post-setup services team runs registration, election and filing as a single workflow.
Frequently Asked Questions
Has Small Business Relief been extended?
Yes. Ministerial Decision No. 131 of 2026, issued on 29 July 2026, extends it to tax periods ending on or before 31 December 2029 [1][6]. The previous cut-off was 31 December 2026.
Is it true that 2026 is the last year of Small Business Relief?
No. That was correct until 29 July 2026 and is now wrong. Much published content still says it because it has not been updated. The last eligible tax period now ends on or before 31 December 2029 [1].
Did the AED 3 million threshold change?
No. The revenue threshold remains AED 3,000,000 per tax period, exactly as set by Ministerial Decision No. 73 of 2023 [2][3]. Only the availability window moved.
Is the threshold AED 3 million or AED 3.15 billion?
AED 3,000,000 is the Small Business Relief revenue threshold. AED 3.15 billion is the consolidated group revenue level above which a member of a multinational enterprise group is excluded from the relief [3][4]. They are unrelated figures and confusing them is common.
Is Small Business Relief automatic if my revenue is under AED 3 million?
No. It must be elected on your Corporate Tax return for each tax period in which you want it [3]. There is no automatic application, and an election made in one period does not carry into the next.
Is the threshold based on revenue or profit?
Revenue. A low-margin trading business on AED 8 million of turnover is outside the relief despite earning less profit than a consultancy on AED 2.9 million [3].
How is revenue measured for the threshold?
Under IFRS or UAE GAAP, based on your financial statements [4]. You cannot switch to a cash view of revenue if your accounts are prepared on an accruals basis.
Can a free zone company claim Small Business Relief?
Only if it is not a Qualifying Free Zone Person. QFZPs are expressly excluded [3][4]. A free zone company that does not meet the qualifying conditions can elect on the same terms as a mainland company.
Do I still need to register for Corporate Tax if I claim the relief?
Yes. Registration and filing obligations continue while you claim the relief, and the election itself is made on the return [3][4]. A simplified return is available to businesses claiming it.
When is the return due?
Within nine months of the end of your tax period, together with any payment [8]. For a period ending 31 December 2026, that is 30 September 2027.
What happens if my revenue goes over AED 3 million in one year?
The relief is unavailable for that period and for later periods, because the test considers the current tax period and all previous ones [3]. Revenue falling back below the threshold in a later period does not restore eligibility.
Do I lose my tax losses if I elect the relief?
No. Tax losses and disallowed net interest expenditure are carried forward rather than lost [4]. They cannot be used in a period where you elect the relief, but they remain available for later periods.
Can I split my company into two to stay under the threshold?
No. Artificial separation where combined revenue exceeds AED 3 million is treated as an arrangement to obtain a Corporate Tax advantage under the general anti-abuse rule in Article 50 [4][5]. Genuine commercial separation is a different matter, but the purpose test is real.
My financial year does not end in December. When does the relief end for me?
The cut-off is defined by when your tax period ends [1][2]. A business with a year ending 30 June has its last eligible period ending 30 June 2029, not December 2029.
How much tax does Small Business Relief actually save?
It removes the 9% that would otherwise apply to taxable income above AED 375,000, for a business under AED 3 million of revenue. On AED 600,000 of taxable profit that is roughly AED 20,250 per period, or AED 81,000 across the four eligible periods.
Does the relief help if my profit is under AED 375,000?
Not in cash terms. The standard regime already charges 0% on the first AED 375,000 of taxable income [8], so a business below that level saves nothing from electing. It still benefits from the simplified return.
Does Small Business Relief affect my VAT position?
No. They are different taxes. VAT registration is mandatory above AED 375,000 of taxable supplies and imports and voluntary above AED 187,500 of taxable supplies, imports or expenses, at a rate of 5% [9]. Electing the relief changes none of that.
Do I need transfer pricing documentation while I elect the relief?
The documentation requirement is relaxed while you elect, but the arm's length principle still applies to related-party transactions [3]. The standard does not disappear with the paperwork.
Should the relief decide whether I go free zone or mainland?
No. A structure should be chosen on ownership, activity, trading rights, visa needs and cost. Where the tax outcome is nil either way, licence cost and renewal burden should decide it.
What happens after 31 December 2029?
Periods ending after that date fall under the standard regime, which is 0% on taxable income up to AED 375,000 and 9% above it [8], unless the position changes again by further decision.
What is the single most common Small Business Relief mistake?
Believing nil tax means nothing to file. Registration and a return are required regardless, and the relief is claimed on the return itself [3][4]. Second is assuming a free zone licence makes you a Qualifying Free Zone Person and therefore ineligible.
Related reading: UAE Corporate Tax Filing, Qualifying Free Zone Person and the 0% Rate, Free Zone vs Mainland vs Offshore
References
[1] UAE Ministry of Finance. Ministerial Decision No. 131 of 2026 amending Ministerial Decision No. 73 of 2023 on Small Business Relief, issued 29 July 2026, extending availability to tax periods ending on or before 31 December 2029. MoF financial legislation
[2] UAE Ministry of Finance. Ministerial Decision No. 73 of 2023 on Small Business Relief, setting the AED 3,000,000 revenue threshold and the original availability window. Ministerial Decision No. 73 of 2023 (PDF)
[3] Federal Tax Authority. Small Business Relief topic page, covering the AED 3,000,000 threshold across current and previous tax periods, the election requirement, the exclusion of Qualifying Free Zone Persons and of members of multinational groups above AED 3.15 billion of consolidated revenue, the switching off of other exemptions, reliefs and deductions, and the continuing arm's length principle. FTA Small Business Relief
[4] Federal Tax Authority. Small Business Relief Corporate Tax Guide, covering revenue determination under IFRS or UAE GAAP, carry-forward of tax losses and disallowed net interest expenditure, continuing registration and filing obligations, the simplified return, and artificial separation of business under the general anti-abuse rule. FTA Small Business Relief
[5] UAE Ministry of Finance. Federal Decree-Law No. 47 of 2022, Article 21 on Small Business Relief and Article 50 on the general anti-abuse rule. Federal Decree-Law No. 47 of 2022 (PDF)
[6] The National. UAE extends corporate tax relief for small businesses until 2029, reporting the Ministry of Finance announcement and the unchanged Dh3 million threshold, 7 August 2026. The National coverage
[7] BusinessDubai.ae. Internal data from UAE company registrations and Corporate Tax filings since 2013, including Small Business Relief elections, filing patterns, and the structural decisions founders take around the AED 3 million threshold. businessdubai.ae
[8] The Official Portal of the UAE Government and Federal Tax Authority. Corporate tax at 0% up to AED 375,000 of taxable income and 9% above, with returns and payment due within nine months of the tax period end. u.ae corporate tax
[9] Federal Tax Authority. Registration for VAT, mandatory above AED 375,000 of taxable supplies and imports, voluntary above AED 187,500 of taxable supplies, imports or expenses, at 5%. FTA VAT registration
