Guide · updated 29.09.2026 · 14 min read · Lucent Legal team

UAE Small Business Relief Extended to 31 December 2029: Eligibility, Dates and When to Opt Out

The UAE has extended Small Business Relief for corporate tax by three years. It now covers tax periods ending on or before 31 December 2029, up from 31 December 2026. Below: who qualifies, which years are covered, what you still have to file, and when electing the relief costs you money.

Short answer

• Ministerial Decision No. 131 of 2026 replaced the end date in Ministerial Decision No. 73 of 2023. The relief now applies to tax periods ending on or before 31 December 2029.
• The threshold has not moved: revenue of no more than AED 3,000,000 in the current tax period and in every earlier one. One year above the line ends eligibility permanently.
• For a company on a calendar financial year, the relief covers 2024 through 2029. The 2029 return is due by 30 September 2030.
• You still register with the FTA and file a return. The election is made inside the return for each period, and it cannot be added after the return is in.
• In any year you elect the relief, a tax loss for that year is not carried forward.
• A freelancer trading as an individual only falls within corporate tax once business turnover passes AED 1,000,000 in a calendar year.

What Decision No. 131 changed

The Minister of State for Financial Affairs signed the decision on 29 July 2026. The Ministry of Finance announced it on 7 August 2026. It takes effect on the day after its official publication.

The decision rewrites a single clause, Article 2(2) of Ministerial Decision No. 73 of 2023. The old wording kept the AED 3 million threshold alive only for tax periods ending on or before 31 December 2026. The new wording carries it through to 31 December 2029.

The threshold, the two excluded categories, the loss rule and the anti-fragmentation rule are unchanged.

The FTA's Small Business Relief guide (CTGSBR1) is dated August 2023. As of 29 September 2026 the FTA still publishes that version, and it still gives 31 December 2026 as the cut-off. Rely on the text of Decision No. 131.

Small business relief eligibility

Article 21 of Federal Decree-Law No. 47 of 2022 lets a resident taxable person elect to be treated as having no taxable income for a tax period. Resident persons include individuals who run a business in the UAE and companies incorporated in the UAE. A foreign company that is effectively managed and controlled from the UAE also counts as resident.

The only financial test is revenue. Profit plays no part. Revenue here means the gross income of the period: all sales, plus other income such as the proceeds from selling a vehicle or equipment. VAT you collect is excluded, because it belongs to the FTA.

So a loss-making company with AED 3.2 million of sales does not qualify. A company that turns AED 1.5 million of profit on AED 2.8 million of revenue does.

The look-back rule is strict. Article 2(3) of Decision No. 73 bars the election if revenue exceeded the threshold in any earlier tax period. One-off receipts count. The FTA guide walks through a shop owner whose sale of the premises pushed revenue past AED 3 million in one year. He lost the relief for that year and for every year after it.

A free zone company can elect the relief, provided it is not a Qualifying Free Zone Person.

Who is excluded

Article 3 of Decision No. 73 names two categories that cannot elect, whatever their revenue:

• Qualifying Free Zone Persons. They already have their own 0% regime on qualifying income, and the two cannot be combined.
• Constituent companies of a multinational group with consolidated revenue of at least AED 3.15 billion that reports under the UAE Country-by-Country Reporting rules.

Non-resident persons are also outside the relief. The one exception is a UAE permanent establishment of a company based in a country whose tax treaty with the UAE contains a non-discrimination clause for permanent establishments.

Freelancers: the AED 1 million test comes first

For an individual, corporate tax does not start at the first dirham. Cabinet Decision No. 49 of 2023 brings an individual's business into scope only once turnover from business activity exceeds AED 1,000,000 in a Gregorian calendar year.

Wages, personal investment income and income from renting out your own property without a licence are left out of that turnover figure entirely.

Here is how it plays out for a licensed freelancer:

1. Turnover of AED 800,000 in 2026. You are not within corporate tax. No registration, no return.
2. Turnover of AED 1,500,000 in 2026. Register with the FTA by 31 March 2027, the deadline set by FTA Decision No. 3 of 2024. File the 2026 return by 30 September 2027, elect the relief in it, and pay nothing.
3. Turnover of AED 3,400,000 in 2026. No relief. Tax is calculated on profit: 0% up to AED 375,000 and 9% on the rest.

Licences, permits and the wider tax picture for freelancers are covered in UAE taxes for freelancers.

Which tax periods are covered: a worked example

Take a mainland LLC whose financial year matches the calendar year. Its first corporate tax period is 2024, since the law applies to tax periods starting on or after 1 June 2023. Revenue stays under AED 3 million every year.

A non-calendar year shortens the window. With a 1 July to 30 June financial year, the last eligible period is the one ending 30 June 2029. The period from 1 July 2029 to 30 June 2030 ends after 31 December 2029, so it falls outside the relief.

Now add growth. Say the same LLC books AED 3.2 million of revenue in 2027. It loses the relief for 2027. It also loses it for 2028 and 2029, even if revenue drops back to AED 2 million.

Small business relief vs the 0% band up to AED 375,000

Every taxable person pays 0% on the first AED 375,000 of taxable income. Small Business Relief is a separate regime that skips the profit calculation altogether.

The AED 56,250 comes from the FTA guide: AED 375,000 at 0% plus AED 625,000 at 9%.

Rates, registration and deadlines for everyone else are set out in UAE corporate tax.

When not to elect the relief

The relief wipes the tax, and it also wipes that year's tax attributes. Three situations make opting out the better call.

The year ended in a tax loss. Under Article 4(1) of Decision No. 73, a loss incurred in a year where you elect the relief cannot be carried forward. The FTA guide uses a company with AED 2.5 million of revenue and AED 3.5 million of costs. Elect, and the AED 1 million loss disappears. Skip the election, file a full return, and the loss stays on record. It then reduces tax in the first year you are over AED 3 million or the relief has expired.

The company belongs to a group. In an elected year you cannot transfer losses to a sister company, and you lose access to the qualifying group transfer relief and business restructuring relief.

You carry disallowed interest. Net interest expenditure from an elected year cannot be carried forward either. The interest cap only bites once net interest expenditure passes AED 12 million in a period, so for most small businesses this point is academic.

Losses from earlier years in which you did not elect are safe. They wait for the next period without the relief.

In a profitable year with revenue under the threshold, the relief always wins. The tax is nil and the return is shorter.

What you still file, and when

Electing the relief does not take you off the FTA's books. The FTA guide states it plainly: a person who elects remains a taxable person.

1. FTA registration. You need a Tax Registration Number to make the election at all. Late registration carries a fixed AED 10,000 penalty.
2. A return for every period. The deadline is nine months after the period ends (Article 53 of the corporate tax law), so 30 September 2026 for calendar-year 2025. A late return costs AED 500 a month for the first 12 months and AED 1,000 a month after that.
3. The election itself. It is made in the return. File without it and the FTA guide says you cannot claim the relief for that period later. The choice is made fresh each year.
4. Revenue records. Keep them for seven years from the end of the period they relate to. Businesses with revenue up to AED 3 million may prepare financial statements on a cash basis.

The relief changes nothing about VAT. Registration, returns and payments carry on as before.

If you shut the business down, the FTA registration has to be cancelled separately, and the relief does not change that: see UAE tax deregistration. Readers who also have Russian tax obligations will find residency and reporting rules in UAE taxes for Russians.

Splitting the business to stay under AED 3 million

Article 6 of Decision No. 73 targets artificial separation: dividing one business so that each piece stays under the threshold. If the FTA establishes it, the relief falls away and the tax that would have been due is recovered along with penalties.

The FTA asks two questions. Was there a valid commercial reason for the split? Are the entities carrying on substantially the same business? It weighs financial, economic and organisational links between them.

The guide's examples are concrete. A restaurant puts food and drinks into separate companies. A café chain gives every branch its own entity. A series of short-lived companies each trade until revenue nears the threshold and then stop.

Owning several companies is not a breach in itself, and the FTA guide says so. If your structure already exists and combined revenue is above AED 3 million, have a lawyer review it before you file a return that elects the relief.

This material is for information only and is not legal advice. UAE law changes — a lawyer will assess how it applies to your situation.