Small Business Relief in the UAE: Now Extended to 2029
Eligible businesses under AED 3 million can elect to pay zero corporate tax — and a 2026 ministerial decision has kept that window open three years longer than planned.
Of all the breaks in the UAE corporate tax system, Small Business Relief (SBR) is the most generous for genuinely small companies — and the most overlooked. It lets eligible businesses treat their taxable income as zero, which means no corporate tax for the period. The catch? It’s still temporary and it’s still not automatic — but it now runs three years longer than most businesses think.
If your business sits under the AED 3 million revenue line, this is the article to read before you file.
What Small Business Relief actually does
SBR allows an eligible resident business with revenue at or below AED 3 million to elect to be treated as having no taxable income for the period. The result is zero corporate tax payable — plus simpler compliance, including the option to use cash-basis accounting.
Small Business Relief doesn’t lower your rate. It removes your taxable income for the period entirely — if you qualify and if you elect it.
The deadline just moved — by three years
This is the part that changed in 2026, and it is the headline every SME needs to internalise. SBR was originally available only for tax periods ending on or before 31 December 2026. Ministerial Decision No. 131 of 2026 — issued on 29 July 2026, amending Ministerial Decision No. 73 of 2023 — extended the AED 3 million threshold to tax periods ending on or before 31 December 2029.
For most calendar-year businesses that turns one remaining claimable period into four: 2026, 2027, 2028 and 2029.
The relief did not get more generous — it got three more years. The AED 3 million threshold, the conditions and the election are all unchanged.
One practical note: the FTA’s published Small Business Relief guide is still the August 2023 edition and still shows the old 2026 cut-off throughout, worked examples included. The ministerial decision is the operative rule.
Who qualifies
To be eligible, you generally need to be:
- A UAE resident person (a mainland company, a UAE-incorporated entity, or a natural person carrying on a business)
- With total revenue of AED 3 million or less — both in the current period and in all relevant prior periods
A few critical nuances:
- It’s a revenue test, not a profit test. A loss-making business can still be ineligible if its sales exceed AED 3 million.
- It’s a look-back test. If your revenue ever exceeded AED 3 million in a prior qualifying period, you’re out — even if it later drops back below the line.
Who is excluded
Even within the threshold, two groups can’t use SBR:
- Qualifying Free Zone Persons (QFZPs) — they already have their own 0% regime
- Members of multinational enterprise (MNE) groups with consolidated revenue above AED 3.15 billion
SBR is an election, not a gift
This trips up a surprising number of businesses. The relief does not apply automatically. You must actively elect it on your corporate tax return for each eligible period. Skip the election, and the normal rules apply regardless of how small you are.
The trade-off worth understanding
SBR isn’t always the optimal choice, and it’s worth a moment’s thought:
- If you elect SBR, you cannot deduct net interest expense for that period, and you can’t carry those interest costs forward.
- If you don’t elect SBR, you may instead carry forward eligible tax losses and disallowed interest to future years.
For a profitable micro-business with little debt, SBR is usually a clean win. For a business with significant interest costs or carry-forward losses it wants to preserve, the maths deserves a proper look.
A simple action plan
- Check your revenue against AED 3 million for the current and all prior relevant periods.
- Confirm you’re not excluded (not a QFZP, not part of a large MNE group).
- Decide deliberately whether electing SBR beats carrying losses and interest forward.
- Make the election on your return — don’t assume it happens by default.
- Revisit the decision every year — the window runs to tax periods ending 31 December 2029, and eligibility is tested period by period.
What this means for you
Small Business Relief is a real, valuable concession — and it has just been extended by three years. It comes down to three things to act on:
Check revenue, not profit — and look back
Eligibility needs total revenue at or below AED 3 million in this period and every prior relevant one. A loss-making business can still be ineligible if its sales crossed the line.
You must elect it on the return
SBR never applies by default — skip the election and the normal rules apply no matter how small you are. Qualifying Free Zone Persons and large MNE-group members can’t use it at all.
Weigh it up, every year
Electing SBR blocks carrying forward net interest and losses. For a profitable micro-business it’s usually a clean win; if you carry significant interest or losses, run the maths first.
Frequently asked questions
Can I claim Small Business Relief retroactively for an earlier tax period?
No. SBR is an election made inside the tax return for that specific period. Once you have filed without electing it — or missed the filing deadline — the relief for that year is gone; you cannot amend your way back into it.
Does Small Business Relief affect my VAT obligations?
No — it only switches off corporate tax for the elected period. VAT registration at AED 375,000 taxable turnover, VAT returns and record-keeping all continue exactly as before, and so do corporate tax registration and filing.
What happens after 2029 when Small Business Relief ends?
From tax periods ending after 31 December 2029 the standard regime applies to everyone: 0% on taxable income up to AED 375,000 and 9% above it. Ministerial Decision No. 131 of 2026 pushed that cut-off back three years from the original 2026 date, so use the window to put bookkeeping and cost records in order — under the normal regime, every properly documented expense reduces your taxable profit.