UAE Extends Small Business Tax Relief Until 2029

Eligible UAE-based small businesses now have more time to benefit from the Corporate Tax relief after the UAE extends Small Business Tax Relief until 2029. On 7 August 2026, the UAE Ministry of Finance announced that Ministerial Decision No. 131 of 2026 extends Small Business Relief to eligible tax periods ending on or before 31 December 2029.

The extension is particularly relevant for resident businesses that remain within remain within the AED 3 million revenue limit and satisfy the remaining eligibility requirements for the relief. The threshold itself has not been increased; instead, the period during which the existing relief can be used has been extended.

For small businesses, this means there is now a longer period to understand the relief, maintain eligibility, and manage Corporate Tax compliance correctly.

What Is UAE Small Business Tax Relief?

UAE Small Business Relief is a Corporate Tax measure designed to ease the tax and reporting requirements faced by businesses that meet the qualifying criteria.

The relief is available to eligible Resident Persons, including natural persons and juridical persons, provided they satisfy the relevant conditions. One of the central conditions is the revenue threshold of AED 3 million.

When an eligible business makes the required election for Small Business Relief, it is treated as having no taxable income for that tax period. The relief therefore works differently from simply applying the standard Corporate Tax rates to taxable income.

However, Small Business Relief does not mean that every business with revenue below AED 3 million is automatically outside the UAE Corporate Tax system. Businesses still need to consider registration, filing, and record-keeping obligations.

UAE Extends Small Business Tax Relief Until 2029: What Has Changed?

Yes. The availability of UAE Small Business Tax Relief has now been prolonged through 31 December 2029.

The Ministry of Finance announced the extension through Ministerial Decision No. 131 of 2026, which amended provisions of Ministerial Decision No. 73 of 2023. The change means that the existing Eligible tax periods ending by 31 December 2029 can continue to fall within the existing Small Business Relief threshold.

The important point is that the AED 3 million revenue threshold has not been raised. The change concerns the period for which the relief may be claimed.

Previously, the relevant threshold was scheduled to apply only to tax periods ending on or before 31 December 2026. The 2026 decision extends the availability of the relief for an additional period.

Who Is Eligible for UAE Small Business Tax Relief?

Eligibility depends on several conditions rather than revenue alone. Under the current FTA guidance, the relief can be elected by a Resident Person, whether a natural person or a juridical person, where revenue is AED 3 million or less in the relevant tax period and in all previous tax periods covered by the applicable rules.

Businesses should consider the following points:

• The AED 3 million revenue threshold applies.
• Businesses need to assess the revenue limit for the current tax period as well as the previous periods covered by the rules.
• The relief must be elected for each tax period.
• Businesses that qualify as a Qualifying Free Zone Person are not permitted to choose Small Business Relief.
• Members of a multinational enterprise group meeting the applicable conditions are also excluded.

This means a business should review its revenue history instead of assessing eligibility solely from the current year’s results.

For example, if a business earns less than AED 3 million in the current year but exceeded the threshold in a relevant previous tax period, it may not qualify for the relief for the current period.

How Does Small Business Relief Work in the UAE?

Small Business Relief must be actively selected by an eligible business rather than being applied automatically because a company’s revenue falls below AED 3 million.

An eligible business makes the election as part of its Corporate Tax return. Once an eligible business satisfies the conditions and chooses the relief, its taxable income is treated as nil for that particular tax period.

The FTA also confirms that the election is made for each tax period. Businesses should therefore reassess their position rather than assuming that an election made for one period automatically carries forward indefinitely.

This is an important distinction because the relief operates within the broader UAE Corporate Tax compliance system. A qualifying business still needs to understand its registration and return obligations.

What Are the Corporate Tax Rules for Small Businesses in the UAE?

Small Business Relief should be considered alongside the wider UAE Corporate Tax rules.

The UAE Corporate Tax system is applicable to companies that are subject to it, while Small Business Relief provides a separate mechanism for eligible resident businesses. Under the relief, a qualifying taxpayer that makes the election is treated as having no taxable income for the relevant period.

The current FTA guidance also states that taxpayers using Small Business Relief cannot use other exemptions, reliefs and deductions for that same tax period. They also remain subject to the arm’s-length principle, although transfer pricing documentation is not required when the relief applies.

Businesses should therefore avoid treating the AED 3 million threshold as a general Corporate Tax exemption. The threshold relates specifically to eligibility for Small Business Relief.

How Do Small Businesses File Corporate Tax in the UAE?

Small Business Relief does not eliminate the need to deal with UAE Corporate Tax compliance. According to the Federal Tax Authority, businesses using Small Business Relief must still complete and file the applicable simplified Corporate Tax return by the required due date.

The basic process involves:

1. Completing Corporate Tax registration when the applicable rules require it.
2. Maintaining records that demonstrate the business’s revenue and eligibility.
3. Preparing the Corporate Tax return for the relevant tax period.
4. Electing for Small Business Relief where the business qualifies.
5. file the return by the deadline applicable to its tax period.

As an example, the FTA specified 30 September 2026 as the filing deadline for businesses whose financial year ended on 31 December 2025. The applicable deadline for other businesses depends on their tax period.

he FTA’s registration service explains that businesses falling under Corporate Tax requirements must complete registration and obtain a Corporate Tax Registration Number as required by the relevant rules.

What Are the Key Benefits of Small Business Tax Relief?

For a business that satisfies the requirements, Small Business Relief can have both tax and administrative implications.

Potentially no taxable income for the relevant period

Where the taxpayer properly opts for the relief and meets all conditions, the relevant tax period is treated as having no taxable income.

Simplified Corporate Tax compliance

The relief is intended to reduce the compliance burden for qualifying small businesses. The FTA provides a simplified return process for businesses that elect for the relief.

Continued availability through 2029

The 2026 amendment gives qualifying businesses a longer period in which they may potentially use the relief, subject to continuing to meet the requirements.

Greater planning visibility

The extension provides businesses with a clearer timeframe for reviewing their Corporate Tax position and preparing for the period after the current relief window.

What Should UAE Small Businesses Do Before 2029?

The 2029 extension gives eligible businesses more time, but it does not remove the need for proper tax planning.

Businesses should regularly:

• Monitor revenue: Keep track of revenue throughout the year instead of checking the AED 3 million threshold only when filing the return.
• Review previous tax periods: Eligibility can depend on revenue in previous relevant tax periods as well as the current period.
• Maintain proper records: Keep adequate financial documentation to substantiate the revenue figures submitted to the FTA.
• Check eligibility: Businesses operating from a Free Zone or belonging to a larger multinational group should pay particular attention to the exclusion rules.
• Complete Corporate Tax compliance: Using Small Business Relief does not eliminate any registration or filing duties that continue to apply.
• Plan beyond 2029: The latest decision currently allows the relief for qualifying tax periods ending by 31 December 2029, so businesses should also consider their position after this period.

Conclusion

The UAE has prolonged its Small Business Tax Relief until 31 December 2029, allowing qualifying resident businesses to continue considering the relief under the Corporate Tax regime. However, the AED 3 million revenue ceiling remains unchanged, meaning the extension affects the duration of the relief rather than increasing its revenue limit.

Small businesses should continue to monitor their revenue, review their eligibility for each tax period, maintain accurate records and meet their Corporate Tax compliance requirements. The relief can simplify the tax position of qualifying businesses, but it does not remove applicable Corporate Tax registration or filing obligations.

Businesses should also keep up with the latestofficial updates and guidance issued by the UAE Ministry of Finance and Federal Tax Authority. If you need help reviewing your eligibility, Corporate Tax obligations or business structure in the UAE, OnDemand International UAE can assist you with tailored business and tax compliance guidance. Contact our UAE experts to discuss your requirements.

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