Small Business Relief Extended to 2029: What It Means for Your UAE Business
If your business earns AED 3 million or less a year, there is good news. The UAE Ministry of Finance has extended corporate tax Small Business Relief, which was due to end with 2026, until 2029.
The extension came through Ministerial Decision No. 131 of 2026. It now covers tax periods ending on or before 31 December 2029. The AED 3 million revenue limit has not changed.
Here is what that means in practice, and what you still need to do.
What is Small Business Relief?
Small Business Relief lets a qualifying business be treated as having no taxable income for a tax period. In simple terms, you pay no corporate tax for that year, even if you made a profit.
It was introduced by Ministerial Decision No. 73 of 2023 to lighten the load on startups and small businesses as corporate tax began.
Who can claim it?
You can elect for the relief if:
You are a UAE tax resident person (a company, or an individual doing business).
Your revenue is AED 3 million or less in the current tax period and in every earlier tax period.
Once your revenue goes above AED 3 million in any tax period, you cannot claim the relief again for later years, even if revenue drops back.
Who cannot claim it?
Qualifying Free Zone Persons (free zone companies using the 0% rate). If this is you, read Is Your UAE Free Zone Income Really Eligible for the 0% Corporate Tax Rate?
Members of multinational groups with consolidated revenue of AED 3.15 billion or more.
Businesses that split one activity into several companies to stay under the limit. The FTA can deny the relief and apply penalties.
What you still need to do
The relief is not automatic, and it does not remove your obligations.
Register for corporate tax on EmaraTax. Late registration carries an AED 10,000 penalty.
File a corporate tax return every year within 9 months of your financial year-end, and choose Small Business Relief in the return. If you miss the deadline, you can lose the chance to claim.
Keep proper accounting records. You need them to prove your revenue stayed under AED 3 million, and the FTA can ask for them.
Is it always the best choice?
Not always. If you elect for the relief in a year:
Any tax loss from that year cannot be carried forward to reduce future profits.
Any disallowed interest expense from that year cannot be carried forward.
If you expect a loss this year and strong profits later, filing normally may save more tax over time. It is worth checking your numbers before you choose.
What should you do now?
Check your revenue for each tax period since you started.
Make sure you are registered and your returns are on time.
Put your bookkeeping in order before your next year-end.
Decide, year by year, whether the relief or normal filing works better for you.
Frequently asked questions
Do I need to apply for the extension?
No. If you qualify, you keep claiming the relief in each year's return until the end of 2029.
My revenue was AED 3.2 million last year but AED 2.5 million this year. Can I claim?
No. Once you pass AED 3 million in any tax period, the relief is no longer available for later periods.
I'm a free zone company. Can I use it?
Only if you are not a Qualifying Free Zone Person. Free zone companies should check which option gives the better result.
Not sure if you qualify?
Al Araidi Auditing has helped more than 1,100 UAE businesses with corporate tax, VAT and audit since 2014. We can check your eligibility, register you and file your return on time.
This article is general guidance as of November 2026 and is not tax advice for your specific situation.
