UAE Small Business Relief Extended to 2029: What UAE Businesses Need to Know

The UAE has extended the period during which eligible businesses can claim Small Business Relief (SBR) under the Corporate Tax regime. The extension was introduced through Ministerial Decision No. 131 of 2026, which amends Ministerial Decision No. 73 of 2023.

The important point is that the AED 3 million Revenue threshold has not increased. What has changed is the period for which that threshold will continue to apply. The relief, subject to the applicable conditions, will now continue for Tax Periods ending on or before 31 December 2029, instead of ending on 31 December 2026.

For small businesses and startups, this extension provides additional time to use a relief that can significantly reduce their Corporate Tax liability. However, Small Business Relief does not mean that a business is outside the UAE Corporate Tax system. Eligible businesses still have registration, filing and record-keeping obligations.

So, what exactly has changed, who can claim the relief, who is excluded, and what should businesses do now?

What is Small Business Relief in the UAE?

Small Business Relief was introduced under Article 21 of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, commonly referred to as the UAE Corporate Tax Law.

Under Article 21(1), a Taxable Person that is a Resident Person may elect to be treated as having not derived any Taxable Income for a Tax Period where its Revenue for the relevant and previous Tax Periods does not exceed the threshold prescribed by the Minister and the other conditions prescribed by the Minister are satisfied.

The detailed rules were then introduced through Ministerial Decision No. 73 of 2023 on Small Business Relief.

The purpose of the relief is to reduce the Corporate Tax burden and compliance requirements for eligible small businesses and startups.

In simple terms, an eligible business that makes a valid SBR election can be treated as having no Taxable Income for that Tax Period.

But there is an important distinction:

Small Business Relief is not the same as being exempt from Corporate Tax.

The business remains within the Corporate Tax system and must comply with the applicable requirements.

What has changed in 2026?

The change was made through Ministerial Decision No. 131 of 2026, issued under the UAE Corporate Tax framework.

Previously, Article 2(2) of Ministerial Decision No. 73 of 2023 provided that the AED 3 million Revenue threshold would apply to Tax Periods commencing on or after 1 June 2023, but only to subsequent Tax Periods ending on or before 31 December 2026.

The 2026 amendment extends this period.

The threshold will now continue to apply to qualifying Tax Periods ending on or before 31 December 2029.

Therefore, the key change is the extension of the SBR period, not an increase in the Revenue threshold.

The AED 3 million threshold remains in place.

What was the position earlier?

When Small Business Relief was introduced in 2023, the AED 3 million Revenue threshold was prescribed for Tax Periods beginning on or after 1 June 2023.

However, the original legislation stated that the threshold would only continue to apply to subsequent Tax Periods ending on or before 31 December 2026.

This meant that, without a further amendment, the specific SBR threshold would have ceased to apply after that period.

The UAE has now extended it to 31 December 2029 through Ministerial Decision No. 131 of 2026.

Who can claim Small Business Relief?

The relief is available to a Taxable Person that is a Resident Person, provided the conditions under the Corporate Tax Law and Ministerial Decision No. 73 of 2023 are satisfied.

The central condition is the Revenue test.

Under Article 2(1) of Ministerial Decision No. 73 of 2023, the Revenue threshold is AED 3,000,000 for each relevant Tax Period and previous Tax Periods.

The Federal Tax Authority also confirms that the SBR election can be made by a Resident Person whose Revenue is AED 3 million or less in the relevant Tax Period and all previous Tax Periods, subject to the exclusions.

This means a business should not look only at its current year's Revenue.

Its previous relevant Tax Periods also matter.

Is the AED 3 million test based on profit or Revenue?

It is based on Revenue, not simply the business's net profit.

Under Article 2(4) of Ministerial Decision No. 73 of 2023, Revenue for this purpose is determined in accordance with the applicable accounting standards accepted in the UAE.

For example, a business may have Revenue of AED 2.8 million but relatively low profit. Another business could have the same Revenue with a much higher profit.

For the SBR threshold, the starting point is the Revenue figure, rather than simply asking how much profit the business made.

Businesses should therefore review their accounting records before making the SBR election.

What happens if the business exceeded AED 3 million in an earlier Tax Period?

This is an important part of the SBR rules.

Under Article 2(3) of Ministerial Decision No. 73 of 2023, a Taxable Person cannot elect for Small Business Relief if its Revenue in any relevant or previous Tax Period has exceeded the AED 3 million threshold.

Therefore, a business cannot simply look at its current year's Revenue and assume that it qualifies.

Its Revenue history needs to be reviewed.

Who cannot claim Small Business Relief?

Being below AED 3 million does not automatically make every business eligible.

Article 3 of Ministerial Decision No. 73 of 2023 excludes certain categories from the relief.

The two important exclusions are:

Qualifying Free Zone Persons (QFZPs) and members of Multinational Enterprises Groups (MNE Groups), as defined under the applicable legislation.

The MNE Group exclusion is linked to the definition under Cabinet Decision No. 44 of 2020 on Organising Reports Submitted by Multinational Companies. The Ministry of Finance explained that this covers groups operating in more than one country with consolidated group revenue exceeding AED 3.15 billion.

Therefore, a company should check its actual Corporate Tax classification before making an SBR election.

Does being a Free Zone company automatically disqualify a business?

Not simply because it is located in a Free Zone.

The specific exclusion under Article 3 of Ministerial Decision No. 73 of 2023 refers to a Qualifying Free Zone Person.

Therefore, businesses operating from Free Zones should first determine their Corporate Tax status and whether they are a QFZP before deciding whether SBR is available.

This distinction is important because Free Zone company and Qualifying Free Zone Person are not interchangeable terms under the Corporate Tax legislation.

Does Small Business Relief mean the company does not need to register for Corporate Tax?

No.

This is one of the most important points businesses need to understand.

A business claiming Small Business Relief remains subject to the applicable Corporate Tax compliance requirements.

The Federal Tax Authority confirmed in September 2026 that persons eligible for Small Business Relief must still comply with their Corporate Tax obligations, including Corporate Tax registration, filing simplified Tax Returns and maintaining supporting documents.

So, the relief does not mean:

“My business earns less than AED 3 million, so I do not need to deal with Corporate Tax.”

That is not how the regime operates.

Does a business claiming Small Business Relief still have to file a Tax Return?

Yes.

Under Article 53(1) of Federal Decree-Law No. 47 of 2022, a Taxable Person must file its Tax Return with the Federal Tax Authority no later than nine months from the end of the relevant Tax Period, unless another date is directed by the Authority.

The FTA has specifically confirmed that businesses eligible for Small Business Relief are required to file their simplified Tax Returns within the statutory timeframe.

For example, the FTA recently reminded Taxable Persons whose Tax Period ended on 31 December 2025 that their Tax Returns were due by 30 September 2026, including those eligible for Small Business Relief.

What happens when a business makes the SBR election?

A valid election changes how the business's Corporate Tax position is calculated for that Tax Period.

Under Article 21(1) of Federal Decree-Law No. 47 of 2022, the Resident Person may elect to be treated as having not derived any Taxable Income for that Tax Period, provided the statutory conditions are satisfied.

The FTA explains that a taxpayer making a valid SBR election is not required to calculate Taxable Income in the ordinary manner and does not pay Corporate Tax on income earned in that relevant Tax Period. The Tax Return also contains fewer fields for such taxpayers.

However, making the election also affects the treatment of certain tax attributes.

What happens to Tax Losses and Net Interest Expenditure?

This is an important consideration before making the election.

Article 21(2) of the Corporate Tax Law provides that certain provisions, including those relating to Tax Loss relief and deductions, do not apply where the SBR election applies.

Ministerial Decision No. 73 of 2023 then specifically addresses these consequences.

Under Article 4, Tax Losses incurred during a Tax Period in which Small Business Relief is elected cannot be carried forward to a subsequent Tax Period.

Similarly, Article 5 deals with Net Interest Expenditure and provides rules concerning amounts incurred during an SBR Tax Period.

This means an eligible business should consider its wider tax position before automatically electing for SBR simply because it falls below AED 3 million.

What happens if a business artificially separates its activities?

The UAE Corporate Tax legislation also addresses arrangements designed to obtain a tax advantage.

Article 6 of Ministerial Decision No. 73 of 2023 deals with the artificial separation of businesses.

If the Federal Tax Authority establishes that a business or business activity has been artificially separated and the total Revenue of the entire business or activity exceeds the AED 3 million threshold, while the persons involved have elected for Small Business Relief, this may be considered an arrangement to obtain a Corporate Tax advantage under Article 50(1) of Federal Decree-Law No. 47 of 2022, which contains the General Anti-Abuse Rule.

Businesses should therefore not assume that dividing one commercial operation between several entities will automatically allow each entity to remain within the SBR threshold.

The commercial and economic substance of the arrangement matters.

What records should a business maintain?

Small Business Relief does not remove the need for proper accounting and supporting records.

The FTA confirmed in September 2026 that businesses claiming SBR must maintain documents supporting the information provided in their Tax Returns and their eligibility for the relief.

Depending on the business, these records can include transaction records, asset registers, liability records and ownership information.

This is particularly important because Article 21(3) of the Corporate Tax Law gives the FTA the ability to verify compliance with the SBR conditions and request relevant information or records.

In addition, Article 56 of the Corporate Tax Law contains the general record-keeping requirements for Taxable Persons.

When does the new extension apply?

The extension applies to the same SBR threshold that was introduced for Tax Periods commencing on or after 1 June 2023.

The important change is that the threshold now continues to apply to subsequent Tax Periods ending on or before 31 December 2029.

In practical terms, the UAE has extended the period in which eligible businesses can use the AED 3 million Small Business Relief threshold by three years beyond the previous 31 December 2026 end date.

Which authorities are involved?

The Ministry of Finance (MoF) is responsible for issuing the relevant Corporate Tax legislation and Ministerial Decisions, including Ministerial Decision No. 73 of 2023 and its 2026 amendment, Ministerial Decision No. 131 of 2026.

The Federal Tax Authority (FTA) administers Corporate Tax registration, Tax Returns and related compliance requirements. Businesses use the FTA's EmaraTax platform for Corporate Tax services and filing.

What should UAE businesses do now?

Businesses with Revenue around or below the AED 3 million threshold should review their position rather than assuming that they automatically qualify.

First, check whether the business is a Resident Person and a Taxable Person for Corporate Tax purposes.

Next, review the Revenue for the current and relevant previous Tax Periods.

The business should then check whether it falls within any of the exclusions under Article 3 of Ministerial Decision No. 73 of 2023, particularly whether it is a Qualifying Free Zone Person or a member of an MNE Group.

It is also important to consider whether the business has Tax Losses or Net Interest Expenditure, because the SBR election has consequences for these items.

Finally, the business should make the SBR election correctly through its Corporate Tax filing and continue maintaining the records necessary to support its eligibility.

What does this mean for small businesses and startups?

The 2026 amendment gives eligible small businesses additional time to use Small Business Relief.

The AED 3 million threshold remains unchanged, but the period during which that threshold applies has been extended from Tax Periods ending on or before 31 December 2026 to Tax Periods ending on or before 31 December 2029.

For startups, micro businesses and other qualifying Resident Persons, this can reduce the Corporate Tax burden for eligible Tax Periods.

At the same time, businesses should not confuse tax relief with tax exemption. Corporate Tax registration, Tax Return filing and record-keeping obligations continue to apply.

Conclusion

The UAE's extension of Small Business Relief to 31 December 2029 is an important Corporate Tax update for small businesses and startups.

The government has not increased the AED 3 million Revenue threshold. Instead, Ministerial Decision No. 131 of 2026 extends the period during which the existing SBR threshold can apply.

The underlying rules under Federal Decree-Law No. 47 of 2022 and Ministerial Decision No. 73 of 2023 remain important. Businesses must still satisfy the Revenue requirement, check the applicable exclusions, make the required election and comply with their Corporate Tax filing and record-keeping obligations.

For a UAE business earning AED 3 million or less, the right question is therefore not simply “Do I have to pay Corporate Tax?”

The more important question is:

“Do I qualify for Small Business Relief, and have I complied with all the conditions to claim it?”

That assessment should be made before filing the relevant Corporate Tax Return.