The UAE Ministry of Finance has extended Corporate Tax Small Business Relief so it now covers tax periods ending on or before 31 December 2029, instead of stopping at the end of 2026. If your UAE business earns AED 3 million or less in revenue a year, you may be able to pay no Corporate Tax for three more years, but only if you meet the conditions and claim the relief properly.
What changed in August 2026
On 7 August 2026 the Ministry of Finance announced Ministerial Decision No. 131 of 2026. It amends the earlier rules on Small Business Relief, which were set out in Ministerial Decision No. 73 of 2023.
Under the old rules, the relief was only available for tax periods ending on or before 31 December 2026. Many small business owners were planning for a full Corporate Tax bill from 2027. The new decision pushes that cut-off out to 31 December 2029.
What has not changed is the revenue limit. It stays at AED 3 million, and it continues to be measured from tax periods starting on or after 1 June 2023. Only the timeline has moved.
What Small Business Relief actually does
UAE Corporate Tax is 0% on the first AED 375,000 of taxable income and 9% on anything above that. Small Business Relief lets an eligible business be treated as having no taxable income for the period, so no Corporate Tax is payable at all.
A simple example: a trading company with AED 2.5 million revenue and AED 600,000 taxable profit would normally owe 9% on AED 225,000 (the amount above AED 375,000), which is AED 20,250. With the relief, it owes nothing for that year. For a full overview of how the tax works, see our UAE Corporate Tax 2026 guide.
Who qualifies (and who does not)
Use this checklist to see whether your business may be eligible:
- You are a UAE resident person for Corporate Tax purposes (for example, a UAE mainland company, or an individual running a business in the UAE).
- Revenue is AED 3 million or less in the current tax period and in every earlier tax period since the relief began. Going over the limit once can rule you out for later years, even if revenue drops again.
- You are not a Qualifying Free Zone Person. Free zone companies enjoying the 0% qualifying rate cannot also claim this relief.
- You are not part of a large multinational group with consolidated group revenue above AED 3.15 billion.
- Your business has not been artificially split into smaller entities just to stay under the threshold. The FTA can treat this as tax avoidance and issue an assessment.
It is not automatic: you must elect it
This is the point many owners miss. Small Business Relief has to be elected in your Corporate Tax return for each tax period you want it to apply to. If you do not claim it, the normal rates apply.
You also still need to:
- Register for Corporate Tax with the FTA through EmaraTax. Late registration carries an AED 10,000 penalty.
- File your Corporate Tax return within nine months of the end of your tax period, even if no tax is due.
- Keep proper accounting records that support your revenue figure, prepared under the applicable accounting standards.
The trade-offs to think about
Relief is usually a good deal, but it has a cost. In any tax period where you elect it, tax losses and disallowed net interest expenditure cannot be carried forward to later years. You also give up certain other reliefs and deductions for that period.
This matters most for businesses that are making a loss now but expect to grow past AED 3 million later. In that case, keeping losses to offset against future profits might save more tax than claiming the relief today. It is worth running the numbers both ways before you file.
What SME owners should do now
| Action | Why it matters |
|---|---|
| Check revenue for every tax period since June 2023 | One year above AED 3 million can end eligibility |
| Confirm your Corporate Tax registration | Avoids the AED 10,000 late registration penalty |
| Note your filing deadline | Returns are due nine months after the period ends |
| Compare relief vs. carrying losses forward | Losses are lost in years you elect relief |
| Review your 2027–2029 growth plans | Know which year you may cross the threshold |
How KATS Finance can help
Our chartered accountants help UAE small businesses register for Corporate Tax, test eligibility for Small Business Relief, decide whether electing it is the better option, and prepare and file returns on time. We can also set up bookkeeping that gives you a reliable revenue figure all year, so you know where you stand before the threshold becomes a problem. Learn more about our UAE accounting and tax services.
Book a consultation, message us on WhatsApp, or email info@katsfintech.com.
Sources
- Khaleej Times: UAE extends corporate tax relief for small businesses until 2029
- The National: UAE extends corporate tax relief for small businesses until 2029
- Aletihad (WAM): Ministry of Finance extends Small Business Relief
- CMS: UAE Corporate Tax Small Business Relief criteria
- Osome: Small Business Relief extended to 2029
This article is general information, not tax advice. Rules may change; check the latest official guidance.