What Is Small Business Relief?
The UAE introduced Corporate Tax at a standard rate of 9% on business profits above AED 375,000, effective for financial years starting on or after 1 June 2023. To ease the burden on smaller companies and startups, the Ministry of Finance created Small Business Relief under Ministerial Decision No. 73 of 2023.
If your business elects for Small Business Relief and your revenue does not exceed the threshold, you are treated as having no taxable income for that tax period — meaning no Corporate Tax is payable. You also benefit from simplified compliance: you do not need to calculate taxable income in the normal way, and you may use a cash basis of accounting.
✅ The key point
Small Business Relief is based on revenue (total turnover), not profit. Even a profitable business can be treated as having no taxable income — as long as its revenue stays at or below AED 3 million and it makes the election.
What Changed in 2026?
Ministerial Decision No. 131 of 2026 amends the earlier legislation. The single most important change is the extended timeline. Everything else — the threshold, the conditions, and the exclusions — remains the same.
| Feature | Before (MD 73 of 2023) | Now (MD 131 of 2026) |
|---|---|---|
| Available until | Tax periods ending on or before 31 Dec 2026 | Tax periods ending on or before 31 Dec 2029 |
| Revenue threshold | AED 3,000,000 | AED 3,000,000 (unchanged) |
| Applies from | Tax periods starting on or after 1 June 2023 | Tax periods starting on or after 1 June 2023 |
| Tax if elected | Treated as no taxable income (0%) | Treated as no taxable income (0%) |
In practical terms, an eligible small business now has three additional years of relief — covering the tax periods for 2027, 2028, and 2029 — before it must move to standard Corporate Tax calculations.
Who Qualifies?
To claim Small Business Relief for a tax period, your business must meet all of the following:
- You are a Resident Person for UAE Corporate Tax purposes — a natural person conducting business or a UAE-incorporated/managed juridical person.
- Your revenue does not exceed AED 3 million in the relevant tax period and in every previous tax period since Corporate Tax began.
- You make the election in your Corporate Tax return for that period — the relief is not automatic.
Once your revenue exceeds AED 3 million in any tax period, you can no longer claim Small Business Relief — in that period or in any future period — even if your revenue later drops back below the threshold.
Who Is Excluded?
Two categories of business cannot elect for Small Business Relief, regardless of their revenue:
⚠️ Not eligible for Small Business Relief
1. Qualifying Free Zone Persons (QFZPs) — businesses benefiting from the 0% Free Zone Corporate Tax regime already have their own relief and cannot also elect Small Business Relief.
2. Members of large Multinational Enterprise (MNE) groups — groups with consolidated global revenues above EUR 750 million (in scope of the OECD Pillar Two rules) are excluded.
How to Claim Small Business Relief
Even if you expect to pay no tax, Small Business Relief is not a way to skip Corporate Tax entirely. You still have obligations:
- Register for Corporate Tax with the Federal Tax Authority via the EmaraTax portal and obtain your Corporate Tax registration number.
- File a Corporate Tax return for each tax period — and elect Small Business Relief within that return.
- Keep proper records demonstrating that your revenue is at or below AED 3 million.
Important Considerations Before You Elect
Small Business Relief is valuable, but it is not always the best choice for every business. Before electing, weigh these points:
- Tax losses cannot be carried forward. If you elect the relief in a loss-making period, you cannot carry that loss forward to offset future profits.
- Disallowed interest cannot be carried forward. Net interest expense that would normally be carried forward is not preserved during relief periods.
- Revenue, not profit, is the test. A low-margin business with high turnover may exceed AED 3 million in revenue while earning modest profit — and would not qualify.
- Artificial separation is anti-abuse territory. Splitting one business into multiple entities purely to stay under AED 3 million can be challenged under the General Anti-Abuse Rule (GAAR).
💡 MEG Tax Agent's take
For most genuinely small businesses under AED 3 million, electing the relief is a clear win — zero Corporate Tax and simpler filing. The extension to 2029 gives you a longer runway to grow before standard Corporate Tax applies. The main cases to think twice about are loss-making periods and businesses close to the threshold.
What You Should Do Now
The extension is good news — but the compliance obligations have not gone away. If you run a UAE business with revenue at or below AED 3 million, make sure you are registered for Corporate Tax, that you file each return on time, and that you elect the relief correctly. Getting this wrong — missing registration or the filing deadline — still triggers FTA penalties, relief or no relief.
MEG Tax Agent is an FTA-registered tax agent (TAAN 20049185). We confirm your eligibility, register you for Corporate Tax, and file your return with the Small Business Relief election applied — so you get the full benefit of the 2029 extension with zero compliance risk.