The UAE has extended the period during which eligible businesses can claim Small Business Relief (SBR) under the Corporate Tax regime.
Under Ministerial Decision No. 131 of 2026, the Small Business Relief framework has been extended to relevant Tax Periods ending on or before 31 December 2029. Previously, the relief was available only for relevant Tax Periods ending on or before 31 December 2026.
Importantly, the extension changes the time period during which the relief may be available. It does not increase the AED 3 million Revenue threshold or remove the other eligibility requirements.
For UAE small businesses, start-ups and entrepreneurs, the extension can provide valuable Corporate Tax relief for additional Tax Periods. However, businesses should understand that Small Business Relief is not an automatic Corporate Tax exemption.
What Changed in 2026?
Small Business Relief was originally introduced under Article 21 of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and further regulated through Ministerial Decision No. 73 of 2023.
Under the original Ministerial Decision, the AED 3 million Revenue threshold applied to Tax Periods commencing on or after 1 June 2023 and only continued to apply to subsequent Tax Periods ending on or before 31 December 2026.
Ministerial Decision No. 131 of 2026 extends this period so that the threshold continues to apply to subsequent Tax Periods ending on or before:
31 December 2029
The key point is simple:
The end date has changed. The AED 3 million Revenue threshold has not.
What Is Small Business Relief?
Small Business Relief is a Corporate Tax relief available to eligible Resident Persons.
Where the applicable conditions are satisfied and the eligible Taxable Person elects for Small Business Relief, the person is treated as having no Taxable Income for the relevant Tax Period.
This can significantly simplify the Corporate Tax position of qualifying small businesses.
However, describing SBR simply as a “Corporate Tax exemption for businesses below AED 3 million” can be misleading.
Small Business Relief is subject to specific conditions, must be elected for the relevant Tax Period, and does not generally remove Corporate Tax registration, return filing and record-keeping obligations.
The AED 3 Million Test Is Based on Revenue — Not Profit
One of the most important points for business owners is that the AED 3 million threshold relates to Revenue, not profit.
For Small Business Relief purposes, the Revenue threshold is:
AED 3,000,000 for each relevant Tax Period.
Revenue must be determined in accordance with the applicable accounting standards accepted in the UAE.
Therefore, a company with:
- Revenue of AED 2.8 million and profit of AED 800,000 may potentially satisfy the Revenue threshold; while
- a company with Revenue of AED 3.2 million and a very small profit — or even an accounting loss — would not satisfy the threshold.
Businesses should therefore monitor their Revenue, rather than simply looking at their taxable profit or net profit.
What Happens If Revenue Exceeds AED 3 Million?
This is particularly important for growing businesses.
Under Ministerial Decision No. 73 of 2023, a Taxable Person cannot elect for Small Business Relief if its Revenue has exceeded AED 3 million in any relevant or previous Tax Period.
For example, assume a business has the following Revenue:
| Tax Period | Revenue |
|---|---|
| 2026 | AED 2.4 million |
| 2027 | AED 3.2 million |
| 2028 | AED 2.7 million |
Subject to the other conditions, the business may potentially elect for Small Business Relief for 2026.
However, once its Revenue exceeds AED 3 million in 2027, falling back below AED 3 million in 2028 does not automatically restore eligibility for Small Business Relief.
This makes continuous Revenue monitoring particularly important for businesses approaching the threshold.
Who Can Potentially Claim Small Business Relief?
At a high level, Small Business Relief is available to an eligible Resident Person that meets the applicable conditions, including the Revenue threshold.
However, Ministerial Decision No. 73 of 2023 specifically excludes certain persons.
A Resident Person electing for Small Business Relief must not be:
- a Constituent Company of a Multinational Enterprises Group as defined under the relevant UAE Country-by-Country Reporting rules; or
- a Qualifying Free Zone Person.
The second point is particularly relevant in the UAE.
Being incorporated in a Free Zone does not, by itself, answer whether Small Business Relief is available. The company's actual Corporate Tax status must be assessed. A Qualifying Free Zone Person cannot elect for Small Business Relief.
Is Small Business Relief Automatic?
No.
Meeting the AED 3 million Revenue threshold does not automatically apply Small Business Relief.
An eligible Taxable Person must elect for Small Business Relief for the relevant Tax Period as part of its Corporate Tax compliance process.
This is an important distinction because a business may satisfy the Revenue threshold but still need to determine whether making the election is appropriate for its circumstances.
Do You Still Need to File a Corporate Tax Return?
Yes.
Small Business Relief should not be confused with an exemption from Corporate Tax compliance.
An eligible Taxable Person claiming Small Business Relief must still comply with applicable Corporate Tax obligations, including filing the required Corporate Tax Return and maintaining appropriate records.
The relief affects the determination of Taxable Income and provides simplified compliance, but it does not mean that an eligible business can simply ignore Corporate Tax filing requirements.
What About Tax Losses?
Businesses making losses should consider the consequences carefully before electing for Small Business Relief.
Where Small Business Relief is elected for a Tax Period, Tax Losses incurred in that Tax Period cannot be carried forward to subsequent Tax Periods.
However, unutilised Tax Losses from previous Tax Periods in which Small Business Relief was not elected may potentially be carried forward to subsequent Tax Periods in which SBR is not elected, subject to the requirements of the Corporate Tax Law.
This means that electing for Small Business Relief may not always be the most beneficial option simply because a business is eligible.
For a loss-making business expecting significant future taxable profits, the ability to preserve and utilise Tax Losses may need to be considered before making the election.
What Does the Extension Mean for a Calendar-Year Business?
For a business using 1 January to 31 December as its Tax Period, the extension means that Small Business Relief may potentially remain available through the Tax Period ending 31 December 2029, provided all applicable conditions continue to be satisfied.
The business must still assess its eligibility for each relevant Tax Period and make the appropriate election.
The extension therefore provides additional time, but it should not be interpreted as guaranteed relief through 2029 for every business currently below AED 3 million.
What Should UAE Small Businesses Do Now?
The extension provides welcome additional certainty, but businesses should continue maintaining proper accounting records and monitoring their Corporate Tax position.
In particular, businesses should:
- monitor Revenue throughout each Tax Period;
- maintain complete and accurate accounting records;
- assess whether Revenue exceeded AED 3 million in any relevant previous Tax Period;
- confirm whether they satisfy the Resident Person requirement;
- determine their Corporate Tax status if operating from a Free Zone;
- consider the impact of an SBR election on Tax Losses and Net Interest Expenditure; and
- complete their Corporate Tax registration and return filing obligations as applicable.
A business should also reassess its position as it grows rather than waiting until the Corporate Tax filing deadline.
Small Business Relief Is a Relief — Not a Reason to Ignore Accounting
The extension to 31 December 2029 is positive news for eligible UAE small businesses.
However, Small Business Relief does not eliminate the need for proper accounting.
In fact, reliable accounting records become essential in establishing whether the AED 3 million Revenue threshold has been met, whether Revenue was correctly recognised, and whether the business continues to qualify for the relief.
The extension should therefore be viewed as an opportunity for eligible businesses to simplify their Corporate Tax position while continuing to build proper financial and compliance systems.
How Finzoryx Can Help
At Finzoryx Consulting LLC, we support UAE start-ups and small businesses with accounting, Corporate Tax compliance and ongoing financial reporting.
If your business Revenue is below or approaching AED 3 million, we can help assess whether Small Business Relief may apply, review your accounting records and prepare your Corporate Tax Return based on your actual circumstances.
Clarity. Control. Confidence.
This article is intended for general informational purposes only and does not constitute tax or legal advice. Eligibility for Small Business Relief should be assessed based on the applicable UAE Corporate Tax legislation and the specific facts and circumstances of each Taxable Person.