Small Business Relief extended to 2029: what changes for your company
Small Business Relief now runs to 2029. Here is what changed, who still cannot claim it and how it can cost you tax losses.
If your company has stayed at or under AED 3 million of revenue in every tax period so far, it can keep electing Small Business Relief for three more years. Ministerial Decision No. 131 of 2026, announced by the Ministry of Finance on 7 August 2026, moved the last eligible period from those ending on or before 31 December 2026 (the original Ministerial Decision No. 73 of 2023) to tax periods ending on or before 31 December 2029.
The relief lets a resident business with revenue of AED 3,000,000 or less elect to be treated as having no taxable income for the tax period. The return is still filed and the tax due is zero. The full rules are in our guide to Small Business Relief in the UAE; below are the practical consequences of the new end date.
What the extension changes
The only thing that moves is the end date. The AED 3 million threshold now applies to tax periods ending on or before 31 December 2029, so companies get three more years of possible relief. The last eligible period depends on your financial year end:
| Financial year end | Last period that can use the relief |
|---|---|
| 31 December | Year ending 31 December 2029 |
| 30 September | Year ending 30 September 2029 |
| 30 June | Year ending 30 June 2029 |
| 31 March | Year ending 31 March 2029 |
The first period taxed under the standard rules is the one that follows. For a calendar-year company that is the year ending 31 December 2030, with the return due by 30 September 2031.
What stays the same: the AED 3 million test per tax period
The revenue test has not changed. It runs per tax period, not over a rolling 12 months:
- Revenue must be AED 3 million or less in the period you claim for.
- Revenue must also have been AED 3 million or less in every earlier tax period. One period above the limit rules the relief out for that period and every later one.
- Revenue is measured under the accounting standards you already use, before expenses. A business with thin margins can exceed the limit while earning little profit.
The relief is still not automatic. It has to be elected in the corporate tax return for each period, and the return is due within nine months of the end of the tax period. A business that qualifies but files without the election is taxed under the standard rules: 0% on taxable income up to AED 375,000 and 9% above it.
Who still cannot use Small Business Relief
The extension does not widen eligibility. These businesses remain excluded, whatever their revenue:
- Qualifying Free Zone Persons. A free zone company that is a QFZP for the period cannot elect the relief. To use the relief, a free zone company that meets the QFZP conditions has to elect out of the regime, and that election covers the tax period and the next four.
- Members of multinational enterprise groups, as defined for country-by-country reporting.
- Any business whose revenue exceeded AED 3 million in an earlier tax period.
Splitting one business into several licences to keep each under AED 3 million does not work either. The decision allows the FTA to treat artificially separated businesses as one.
The loss carry-forward trap
Electing the relief has a cost that is easy to miss. Tax losses incurred in a period under the relief cannot be carried forward, and neither can net interest expenditure. Losses from earlier periods in which you did not elect can still be used in later periods in which you do not elect.
This matters most for young companies. Under the standard rules, a tax loss can be carried forward and offset against up to 75% of taxable income in later years. If you expect a loss now and profit later, electing the relief in the loss year gives that loss up. Filing under the standard rules for that year can be worth more than the relief, even though the tax for the year is zero either way.
With the relief available to 2029, some companies will face this choice for several years in a row.
What to do with your 2026 to 2029 periods
Check your revenue history. Confirm revenue for every tax period since your first one. If any period exceeded AED 3 million, the relief is not available and the extension does not change that.
Decide period by period. Outside the QFZP regime, the election is made in each return. A profitable year under AED 3 million of revenue usually favours the relief. A loss-making year may not.
Free zone companies: compare with QFZP. The extension gives small free zone companies more time on the simpler route, which needs no substance or de minimis tracking and no audit. A company that expects to pass AED 3 million of revenue soon should still build the substance and audited accounts that QFZP status requires, because those take time to put in place. Electing out of QFZP to use the relief covers the tax period and the next four, so model both routes before you file. Our guide to who pays 0% corporate tax in the UAE compares the routes.
Plan for 2030. The relief still has an end date. Model the first period after it under the standard rules. For many small companies the AED 375,000 0% band covers most of their profit anyway; for others the change is a real tax cost. Our corporate tax calculator gives a first estimate.
Our corporate tax service handles the election, the return and the comparison with QFZP status.
Correction, 23 September 2026: the first version of this post, published on 7 September 2026, said that no extension had been announced and that the relief ended with tax periods ending on 31 December 2026. That was wrong: the Ministry of Finance had announced the extension to 2029 on 7 August 2026. The post has been rewritten.
This is general information on UAE rules. It is not legal, tax or immigration advice for your situation. Rules and government fees change; we confirm the position for your facts in writing before you act.