UAE Small Business Relief can reduce the Corporate Tax burden and compliance requirements for eligible small businesses. The relief is available to qualifying Resident Persons whose Revenue does not exceed AED 3 million, subject to the conditions of the UAE Corporate Tax rules.
This guide explains how Small Business Relief works, who may qualify, how the Revenue threshold is tested, the consequences of making an election and the extension of the relief to Tax Periods ending on or before 31 December 2029.
What is Small Business Relief?
When an eligible Taxable Person elects for Small Business Relief, it is treated as having no Taxable Income for the relevant Tax Period. This can simplify the Corporate Tax calculation and reduce the compliance burden for qualifying small businesses and start-ups.
The relief is not automatic. The business must meet the conditions and make an election in its Corporate Tax Return for each Tax Period in which it wishes to apply the relief.
Who can elect for Small Business Relief?
The relief is available to a Resident Person for UAE Corporate Tax purposes, including eligible juridical persons and natural persons carrying on a Business or Business Activity.
The person must have Revenue of no more than AED 3 million in the relevant Tax Period and in all previous relevant Tax Periods. Eligibility should therefore be reviewed using the business’s current and historical Revenue records.
How does the AED 3 million Revenue threshold work?
The threshold is based on Revenue, not accounting profit or Taxable Income. Revenue should be determined using the applicable accounting standards accepted in the UAE.
- Revenue must be equal to or below AED 3 million for the relevant Tax Period.
- Revenue must also have been equal to or below AED 3 million in every previous relevant Tax Period.
- If Revenue exceeded AED 3 million in an earlier Tax Period, Small Business Relief will not be available in a later period even if Revenue subsequently falls below the threshold.
- The election must be considered separately for each Tax Period.
Small Business Relief extended to 31 December 2029
Ministerial Decision No. 131 of 2026 amended the timeline in Ministerial Decision No. 73 of 2023. The AED 3 million threshold applies to Tax Periods commencing on or after 1 June 2023 and continues to apply to subsequent Tax Periods that end on or before 31 December 2029.
The previous rules referred to Tax Periods ending on or before 31 December 2026. The 2026 decision therefore extends the period of availability by three years without changing the AED 3 million threshold.
Ministerial Decision No. 131 of 2026 was issued on 29 July 2026 and states that it comes into effect on the day following its official publication.
What does the extension mean for calendar-year businesses?
For an eligible business with a calendar-year Tax Period, the extension may allow Small Business Relief to be elected for periods ending on 31 December 2027, 31 December 2028 and 31 December 2029, as well as earlier eligible periods.
The extension does not guarantee eligibility. The business must continue to satisfy the Revenue threshold and all other conditions for each Tax Period.
Who cannot elect for the relief?
Small Business Relief is not available to:
- a Qualifying Free Zone Person; or
- a member of a Multinational Enterprise Group with consolidated group Revenue exceeding AED 3.15 billion.
A Free Zone business that is not a Qualifying Free Zone Person may require a separate assessment based on its Corporate Tax status and circumstances.
Does the business still need to register and file?
Small Business Relief does not remove the need to consider Corporate Tax registration and return-filing obligations. The election is made in the Corporate Tax Return, so the business should maintain its registration details, accounting records and supporting information and file by the applicable deadline.
What are the consequences of making the election?
Before electing for Small Business Relief, a business should consider the wider tax effect:
- Tax Losses arising in a period for which the relief is elected cannot be carried forward.
- Net Interest Expenditure arising in that period cannot be carried forward under the general interest deduction limitation rules.
- Other exemptions, reliefs and deductions are generally not available for that period.
- Transfer pricing documentation requirements may be simplified, but the business must still comply with the arm’s length principle.
The best choice can depend on expected profits, losses, financing costs and future plans. The election should therefore be reviewed using the business’s actual records and forecasts.
Artificial separation of a business
A business should not divide its activities between separate persons simply to remain within the AED 3 million threshold. If the Federal Tax Authority determines that a Business or Business Activity has been artificially separated to obtain a Corporate Tax advantage, the arrangement may be challenged under the anti-abuse provisions.
Records businesses should maintain
An eligible business should retain records supporting its Revenue, accounting treatment and Small Business Relief assessment. Before filing, it should:
- Review Revenue for the current and all previous relevant Tax Periods.
- Confirm that it is a Resident Person and is not within an excluded category.
- Assess the impact on Tax Losses, financing costs and other reliefs.
- Document why the conditions are satisfied.
- Make the election in the Corporate Tax Return for the relevant Tax Period.
How Business Catalyst can help
Business Catalyst Consulting can help UAE businesses assess Small Business Relief eligibility, review Revenue records and prepare for the Corporate Tax Return election.
Read our UAE Corporate Tax return filing checklist or learn more about our Corporate Tax services in the UAE. To discuss your circumstances, contact Business Catalyst.
Official references
- Federal Tax Authority: Small Business Relief
- Ministerial Decision No. 131 of 2026, issued on 29 July 2026, amending Ministerial Decision No. 73 of 2023.
Disclaimer: This article provides general information and is not tax, legal or financial advice. Eligibility and the effect of an election depend on the facts of each business. Confirm the applicable legislation, official publication and current FTA guidance before filing.