Changes for UAE Small Business Relief Extended to 2029

Until this summer, Small Business Relief was due to end with tax periods closing on 31 December 2026, and many small business owners were already budgeting for 9% corporate tax from 2027. That plan is now out of date. With Ministerial Decision No. 131 of 2026, announced by the Ministry of Finance in August 2026, the relief is extended to tax periods ending on or before 31 December 2029.

Here is what changed, what did not, and how founders of small UAE companies should treat the extra three years.

What Ministerial Decision No. 131 of 2026 Changed

Small Business Relief was created by Ministerial Decision No. 73 of 2023 under Article 21 of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022). It originally applied to tax periods starting on or after 1 June 2023 and ending on or before 31 December 2026.

Decision 131 of 2026 changes one thing: the end date. The relief now covers tax periods ending on or before 31 December 2029. For a company with a calendar financial year, that means FY2027, FY2028 and FY2029 can now qualify as well.

Everything else stays as it was: the AED 3 million revenue threshold, who is eligible, who is excluded and how the election is made.

How Small Business Relief Works in the UAE

A business that elects for the relief is treated as having no taxable income for that tax period, so no corporate tax is payable at all, not merely 0% on the first AED 375,000. To qualify, the business must:

• be a resident person (a UAE company, or an individual carrying on business here);
• have revenue of AED 3 million or less in the current tax period and in every previous tax period;
• elect for the relief in its corporate tax return.

The second condition is the one founders most often miss. Once revenue exceeds AED 3 million in any period, every later period has a previous period above the threshold, so a later dip in revenue does not restore eligibility. A business that is growing towards the limit should plan for the year it crosses it.

Who Is Excluded Now

The extension does not open the relief to anyone new. It remains unavailable to:

• Qualifying Free Zone Persons. A free zone company that wants the 0% rate on qualifying income must choose between that regime and Small Business Relief; it cannot have both. See our guide to UAE free zone qualifying income.
• Members of large multinational groups with consolidated group revenue above AED 3.15 billion.
• Artificially separated businesses. Splitting one business across several entities to keep each under AED 3 million is caught by the anti-abuse rules. If the FTA finds an artificial separation, it can deny the relief and recover the tax with penalties.

What Electing for the Relief Costs You

The relief is not free in every respect:

• Tax losses. In a period where you elect, you cannot generate, use or transfer tax losses. Losses from earlier non-elected years carry forward, but a loss-making year under the relief creates nothing to offset later.
• Interest. The general interest deduction limitation does not apply in an elected year, but that year still counts towards the ten-year carry-forward window for disallowed interest.
• Transfer pricing. Formal transfer pricing documentation is not required, but related-party transactions must still be at arm’s length.

For a start-up expecting early losses and later profits, it can sometimes be better not to elect in the loss years. This is worth modelling with your accountant rather than ticking the box by default.

How to Claim the Relief

The relief is never applied automatically. You elect for it each year in the corporate tax return filed through the FTA’s EmaraTax platform, within nine months of the end of the tax period. For a calendar-year UAE company, the FY2025 return was due by 30 September 2026. You must also:

• stay registered for corporate tax and file a return every year, even where nothing is payable;
• keep accounting records that support the revenue figure you declare;
• keep the records the FTA may request to test the AED 3 million limit and the anti-abuse rules.

Companies with revenue under AED 3 million may prepare financial statements on a cash basis, which keeps compliance costs down. See our overview of UAE company compliance in 2026 for the wider filing picture.

What UAE Founders Should Do Now

• Revisit 2027 budgets. If you planned for 9% tax from 2027, eligible businesses can now plan on paying nothing until the end of FY2029.
• Check your full revenue history. A single year above AED 3 million since June 2023 rules you out permanently.
• Free zone companies: compare both routes. The extension makes the relief a longer-lasting alternative to the qualifying free zone regime for small free zone companies.
• Do not restructure to stay under the limit. Artificial splitting is exactly what the anti-abuse rules target.

For the rest of the corporate tax framework (9% above AED 375,000, the participation exemption and free zone treatment), see our guide to UAE 9% corporate tax for foreign-owned companies.

FAQ

Has UAE Small Business Relief been extended?

Yes. Ministerial Decision No. 131 of 2026 extends it to tax periods ending on or before 31 December 2029, instead of 31 December 2026.

Did the AED 3 million threshold change?

No. Revenue must still be AED 3 million or less in the current tax period and in every previous tax period.

Can a free zone company claim Small Business Relief?

Only if it does not claim Qualifying Free Zone Person status. The two regimes cannot be combined in the same period.

Is the relief applied automatically?

No. The business must elect for it in each corporate tax return filed through EmaraTax, and must remain registered and file every year.

If my revenue went above AED 3 million once, can I qualify again later?

No. Because the test covers all previous tax periods, exceeding the threshold in any period removes eligibility for all later periods.

Conclusion

The extension to 2029 gives small UAE businesses three more years without corporate tax, but only if they meet every condition and claim the relief each year. The traps have not changed: the lifetime revenue test, the exclusion for qualifying free zone companies and the anti-abuse rules on splitting businesses.

Setting up a new company or deciding whether the relief or the free zone regime suits you better? Legarithm handles UAE company formation, corporate tax registration and annual filings. Message us and we will look at your structure.

Disclaimer: This article is general information as of October 2026 and is not tax or legal advice. Eligibility depends on your specific facts; confirm with a registered UAE tax agent or the Federal Tax Authority before relying on Small Business Relief.