Small Business Relief lets a UAE business with revenue of AED 3 million or less be treated as having no taxable income for that tax period. It is elective — you claim it in your tax return, and it is not applied for you — and it has been extended by Ministerial Decision No. 131 of 2026 to tax periods ending on or before 31 December 2029.
That extension is the point most sources still get wrong. A great deal of guidance, including pages that look current, still says the relief ends with tax periods ending on or before 31 December 2026. It does not — and a business planning on the old date may give up a relief it still has.
What does Small Business Relief actually do?
Where the relief is claimed, the business is treated as having no taxable income for that tax period. No corporate tax is payable, and you avoid the full computation that would otherwise sit behind that result.
Be precise about what it is not. It is no exemption from the regime and no reason to stop filing. A business claiming the relief remains a taxable person under Federal Decree-Law No. 47 of 2022, remains registered, and still files a return within 9 months after the end of the tax period. The relief is claimed inside that return: no return, nothing claimed.
It sits alongside the ordinary rate structure rather than replacing it. Without the relief, taxable income up to AED 375,000 is taxed at 0% and the excess at 9% — so a business under the AED 3 million line with modest profits may pay nothing either way.
Who qualifies for Small Business Relief?
The test is on revenue, not profit. A business qualifies where revenue is AED 3 million or less in the relevant tax period and in all previous tax periods. Both halves matter: a single earlier period above the line disqualifies you going forward, even if revenue has since fallen back.
Revenue means gross income before expenses, which catches out high-turnover, thin-margin businesses: a trader well above AED 3 million on slim margins does not qualify however small its profit. If you sit near the line, the figure your bookkeeping produces is the figure that decides it.
| Condition | Position |
|---|---|
| Revenue in the relevant tax period | AED 3 million or less |
| Revenue in all previous tax periods | AED 3 million or less |
| Tax periods covered | Ending on or before 31 December 2029, per Ministerial Decision No. 131 of 2026 |
| How it is obtained | By election in the tax return; never automatic |
| Qualifying Free Zone Persons | Excluded |
| Multinational groups in scope of the top-up tax | Excluded |
| Effect where claimed | No taxable income for that period |
Has Small Business Relief been extended to 2029?
Yes. The relief was originally available for tax periods ending on or before 31 December 2026. Ministerial Decision No. 131 of 2026 extended it to tax periods ending on or before 31 December 2029, announced by the Ministry of Finance on 7 August 2026.
The test is the date your tax period ends, so check your own year end against the new cut-off rather than assuming the calendar position applies to you. Because the extension is recent, read any guidance on it with its date in mind. The announcements are published by the Ministry of Finance, with general taxation guidance on the UAE Government portal.
Who is excluded from Small Business Relief?
The following are excluded regardless of revenue:
- Qualifying Free Zone Persons. If you hold that status and benefit from 0% on qualifying income, you cannot also claim Small Business Relief. The regimes are alternatives, not a stack — the trade-offs are on our free zone business setup page.
- Members of multinational groups in scope of the top-up tax — groups with consolidated global revenues of EUR 750 million or more, which face a Domestic Minimum Top-up Tax of 15% for financial years starting on or after 1 January 2025 under Cabinet Decision No. 142 of 2024.
The group exclusion surprises people. A UAE entity with revenue well under AED 3 million can be shut out by a parent several layers above it, because the test looks upwards through the group rather than at your own accounts.
When is claiming the relief the wrong choice?
Because it is elective, there is a real decision here, and cases where claiming leaves you worse off. Having no taxable income cuts both ways: the period produces nothing you can carry into a later one.
The clearest example is a loss-making business. Normally a tax loss can be carried forward and set against taxable income in later periods, subject to the conditions in the law. Where the relief is claimed there is no taxable income, so losses arising in that period are not available to carry forward against future profits. For a business loss-making now but expecting profits once revenue passes AED 3 million, electing in can mean giving up relief worth real money later. The same logic applies to unused net interest expenditure.
Equally, if your profits already sit inside the 0% band up to AED 375,000, the relief may save no cash at all, since there was no tax to pay either way. What you weigh then is lighter compliance against preserving those carry-forward positions.
Who gets caught out
- Businesses that assumed the relief is automatic. It is elective. If you did not claim it in the return, you did not get it.
- Businesses that stopped registering or filing. The relief removes neither obligation, and late registration carries a penalty of AED 10,000 under FTA Decision No. 3 of 2024.
- Businesses that forgot the “all previous periods” condition. One earlier period over AED 3 million closes the door for good.
- Loss-making businesses that claimed without thinking, so the losses were never preserved and the cost surfaced in a later profitable year.
- Businesses working from the old end date of 31 December 2026, when the relief now covers tax periods ending on or before 31 December 2029.
- Businesses confusing this with VAT. Small Business Relief is a corporate tax measure with no effect on VAT registration or returns — see our VAT registration and services page.
Common questions
Is Small Business Relief automatic if my revenue is under the threshold?
No. It is elective and must be claimed in your tax return for the relevant tax period. Meeting the AED 3 million test makes you eligible; it does not make the relief apply.
How long is the relief available?
For tax periods ending on or before 31 December 2029, following Ministerial Decision No. 131 of 2026. The earlier end date of 31 December 2026 has been superseded.
Do I still need to register and file if I claim it?
Yes. You remain a taxable person under Federal Decree-Law No. 47 of 2022, which applies to financial years starting on or after 1 June 2023, and your return is still due within 9 months after the end of the tax period.
Can a free zone company claim Small Business Relief?
Not as a Qualifying Free Zone Person — that category is excluded. A free zone company without that status is in a different position, and the answer turns on its activities, so have it confirmed rather than assumed.
My revenue was above AED 3 million in an earlier year but is below now. Do I qualify?
No. Revenue must be AED 3 million or less in the relevant tax period and in all previous ones, so an earlier period above the line disqualifies you.
Have the election decided before the return is due
The decision is usually quick once someone has seen your revenue history, your profit position and whether you hold losses worth preserving. In a consultation we will test your eligibility against both limbs of the revenue test, confirm no exclusion catches you, and set out what claiming would mean across the periods now covered by the extension. If that would help, speak to our Dubai team. This page is general information, not tax advice for a specific business; we have formed no view on your position here, and the election is not one to make on the strength of a web page.
This page sets out the position as at October 2026. Tax rules change, and the treatment of any specific business depends on its own facts — confirm the current requirements before you act.
