Small Business Relief in the UAE: eligibility, election and the 2029 end date

Small Business Relief lets a UAE 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 Ministry of Finance extended the relief on 7 August 2026 (Ministerial Decision No. 131 of 2026), so it now covers tax periods ending on or before 31 December 2029. Revenue must stay within the limit in the period claimed and in every earlier tax period. The relief has to be elected in the return, and Qualifying Free Zone Persons and members of multinational enterprise groups cannot use it.

What Small Business Relief does

Small Business Relief comes from Article 21 of Federal Decree-Law No. 47 of 2022 and Ministerial Decision No. 73 of 2023. It works as an election. A resident business that makes it is treated as having no taxable income for the whole tax period. The return is filed and the tax is zero.

That is different from the AED 375,000 band, which every company under the standard rules gets automatically. The band takes the first slice of taxable income out of tax. The relief looks at revenue and, if you are under the limit, removes taxable income altogether, so nothing above AED 375,000 is taxed either. Our guide to who pays 0% corporate tax compares all three 0% routes.

The 2029 extension

Under the original decision the relief applied only to tax periods ending on or before 31 December 2026. On 7 August 2026 the Ministry of Finance announced Ministerial Decision No. 131 of 2026, which extends it to tax periods ending on or before 31 December 2029. The AED 3 million threshold continues to apply to those periods.

Our blog post on the Small Business Relief extension to 2029 explains what changed for companies that had planned around the 2026 cut-off.

Who qualifies for Small Business Relief

The relief is for resident persons: a UAE company, or an individual running a business, whose revenue was AED 3,000,000 or less in the tax period claimed and in every previous tax period. Two groups are excluded by Article 3 of the decision however small their revenue.

The last row matters. The test is not reset each year. Once revenue has exceeded AED 3 million in a tax period, the relief is gone for that period and every later one, even if revenue falls again.

How the AED 3 million revenue test works

Revenue is gross income for the tax period under the accounting standards you already use, before expenses (MD 73/2023, Art. 2(4)). A business with AED 2.9M of revenue and thin margins is eligible; one with AED 3.1M of revenue and a loss is not.

The test runs per tax period. It is not a rolling 12-month figure, which is the VAT registration test. What counts is total revenue for the period you claim for, and for each earlier period. A large invoice late in the year can therefore take the whole period over the limit, so track revenue for the current period month by month.

You cannot split a business to stay small. Article 6 of the decision lets the FTA treat artificially separated businesses as one and deny the relief. Two licences that do the same work for the same owners, each kept under AED 3 million, are the case it describes.

Losses, net interest and the QFZP choice

A period under the relief does not build tax attributes. Tax losses incurred in a relief period cannot be carried forward (Art. 4), and neither can net interest expenditure (Art. 5). Losses from earlier periods where you did not elect can still be carried to later periods where you do not elect.

For a start-up that expects losses now and profit later, electing in a loss year can waste losses that would otherwise offset up to 75% of later taxable income (Article 37 of the Corporate Tax Law). In that case it can be better to file under the standard rules and keep the loss.

A free zone company that meets the QFZP conditions also has to choose between the relief and QFZP status, because a QFZP cannot elect it. To use the relief, it has to elect out of the QFZP regime, and that election covers the tax period and the next four. The relief needs no substance or de minimis tracking and no audit. QFZP has no end date but needs audited accounts, substance and transfer-pricing records every year.

How to elect Small Business Relief

The relief is claimed in the corporate tax return for each period you want it. You still register for corporate tax and file the return 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.

The end date is tied to the period end, not the filing date. For a calendar-year company the year ending 31 December 2029 is the last eligible period, and its return is filed in 2030.

Keep the evidence behind the revenue figure: invoices, bank statements and monthly books that tie to them. If the FTA reviews the return, that is what supports the election.

Checklist for 2026 to 2029

First, confirm revenue for the current tax period and every earlier one since your first tax period. Second, if you hold a free zone licence and meet the QFZP conditions, remember that electing out of QFZP to use the relief covers the tax period and the next four, so model both routes before you file and write down why. Third, if you are making a loss, model whether keeping it is worth more than the relief. Fourth, make the election in each return you want it for.

Our corporate tax calculator gives a first estimate under the standard rules. For the election, the return and the QFZP comparison, see our corporate tax service.

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.