The UAE Ministry of Finance has extended Small Business Relief under the Corporate Tax Law by three years: eligible businesses with revenue of AED 3 million or less can now claim the relief for tax periods ending on or before 31 December 2029, instead of the original cut-off of 31 December 2026. The change comes through Ministerial Decision No. 131 of 2026, issued on 29 July 2026 and announced by the Ministry of Finance, which amends Ministerial Decision No. 73 of 2023.
For thousands of UAE startups, freelancer establishments and small companies, this is three more years of paying zero corporate tax with dramatically simplified compliance, provided the conditions are met.
The news in 30 seconds
- Small Business Relief (SBR) now runs to tax periods ending on or before 31 December 2029 (previously 31 December 2026).
- The AED 3 million revenue threshold is unchanged, as are all eligibility conditions.
- For calendar-year businesses, that means SBR can potentially be elected for FY2026, FY2027, FY2028 and FY2029.
- The election is still made in each tax return, every period. It is not automatic.
What exactly changed
Ministerial Decision No. 131 of 2026 makes one precise amendment: it replaces Clause 2 of Article 2 of Ministerial Decision No. 73 of 2023. The AED 3 million threshold still applies to tax periods commencing on or after 1 June 2023, but it now continues to apply to tax periods that end on or before 31 December 2029, rather than 31 December 2026. The Decision takes effect the day after its publication.
| Before (MD 73 of 2023) | Now (MD 131 of 2026) | |
|---|---|---|
| Revenue threshold | AED 3,000,000 | AED 3,000,000 — unchanged |
| First eligible tax period | Starting on or after 1 June 2023 | Starting on or after 1 June 2023 — unchanged |
| Last eligible tax period | Ending on or before 31 Dec 2026 | Ending on or before 31 Dec 2029 — extended |
| Eligibility conditions | Resident persons; not QFZPs or MNE group members | Unchanged |
| How to claim | Election in the tax return, each period | Unchanged |
According to the Ministry of Finance, the extension is intended to support small businesses and startups, strengthen the business environment, and reinforce the UAE's position as a competitive global investment destination.
Quick recap: what is Small Business Relief?
Small Business Relief is a provision under Article 21 of Federal Decree-Law No. 47 of 2022 (the UAE Corporate Tax Law). Where an eligible resident taxable person's revenue does not exceed AED 3 million, they can elect to be treated as having no taxable income for that tax period, meaning no corporate tax is payable and compliance is significantly simplified.
Electing businesses still register for corporate tax and file a return, but the return is simplified, and they can use cash-basis accounting. What they give up in an elected period: they cannot deduct expenses, claim exemptions, carry forward that period's tax losses, or carry forward disallowed net interest expenditure.
If corporate tax filing is new territory for your business, our team covers the full picture in Stevva's UAE corporate tax services.
Reading the source helps. You can open the full text of Ministerial Decision No. 131 of 2026 (PDF), and see the one-line summary on our UAE tax updates timeline.
Who qualifies — and who doesn't
You can elect for Small Business Relief if:
- You are a resident taxable person (a UAE-incorporated company or a natural person conducting business in the UAE);
- Your revenue is AED 3 million or less in the relevant tax period and every previous tax period starting on or after 1 June 2023; and
- You make the election in your tax return for that period.
You cannot claim it if:
- You are a Qualifying Free Zone Person (QFZP) benefiting from the 0% free zone rate; or
- You are a member of a Multinational Enterprise (MNE) Group with consolidated global revenue above AED 3.15 billion.
Two traps to keep in view:
- The threshold is a one-way door. Cross AED 3 million in any tax period, and SBR is no longer available for that period or any future one, even if revenue later falls back under the threshold.
- Artificial business splitting is caught. If the Federal Tax Authority finds a business was artificially separated into multiple entities to stay under AED 3 million, the general anti-abuse rules of the Corporate Tax Law apply, with penalties to match.
What the extension means in practice
For a business with a January–December financial year that has remained under the threshold, the relief can now potentially cover the 2026, 2027, 2028 and 2029 tax periods, on top of periods already elected. At the 9% corporate tax rate, a small business generating steady profits saves real money each year, but the bigger practical benefit for most micro businesses is the compliance simplification: simplified returns and cash-basis accounting instead of full corporate tax computations.
The extension also removes a planning cliff-edge. Until this week, small businesses faced full corporate tax exposure from their first period ending after 31 December 2026 and needed to prepare for that transition in the coming months. That deadline has now moved three years out, though the smart move is to use the breathing room, not waste it. Businesses growing toward AED 3 million should plan for the crossover deliberately: once you exceed the threshold, transfer pricing documentation, full accrual accounts and complete tax computations all come into scope.
Key takeaway: The extension buys time. It doesn't change the destination. Every business electing SBR today should still be building clean books and audit-ready records, because the relief expires (currently) end-2029 and the threshold can be crossed at any time.
Not sure whether to elect Small Business Relief this year?
The election isn't always the right answer: businesses with losses or heavy interest costs sometimes benefit from not electing. Stevva Tax reviews the numbers and files it right.
Book a corporate tax consultationWhat businesses should do now
- Confirm your eligibility history. Check revenue for every tax period since 1 June 2023: one period above AED 3 million disqualifies all future elections.
- Elect in every return. The relief is claimed period by period in the tax return; missing the election in a filed return means paying tax for that period.
- Model the crossover. If revenue is trending toward AED 3 million, budget for the full compliance load (and 9% tax on profits above AED 375,000) before you cross it.
- Don't neglect the books. Simplified filing is not no filing: the FTA can request records, and clean accounts are what make the eventual transition painless. Stevva's accounting and bookkeeping services keep SBR-electing businesses audit-ready.
- Free zone companies: check your status. If you're a Qualifying Free Zone Person you cannot use SBR, but a free zone entity that doesn't meet (or elects out of) QFZP status may be eligible. This is a genuine planning decision; get advice before choosing.
Frequently asked questions
Has UAE Small Business Relief been extended?
Yes. Ministerial Decision No. 131 of 2026, issued by the UAE Ministry of Finance on 29 July 2026, extends Small Business Relief to tax periods ending on or before 31 December 2029. The previous end date was 31 December 2026.
Did the AED 3 million threshold change?
No. The revenue threshold remains AED 3 million per tax period, unchanged from Ministerial Decision No. 73 of 2023. Only the end date of the relief window was amended.
Which tax periods does Small Business Relief now cover?
Tax periods commencing on or after 1 June 2023 and ending on or before 31 December 2029. For a business with a calendar-year financial year, that spans the 2023/24 through 2029 tax periods, subject to meeting the conditions each period.
Who is eligible for Small Business Relief in the UAE?
Resident taxable persons (UAE companies and natural persons doing business in the UAE) whose revenue does not exceed AED 3 million in the relevant tax period and all previous tax periods since 1 June 2023. Qualifying Free Zone Persons and members of MNE groups with consolidated revenue above AED 3.15 billion are excluded.
Is Small Business Relief automatic?
No. It must be elected in the corporate tax return for each tax period. A business that qualifies but does not make the election in its return pays corporate tax normally for that period.
Do I still need to register for corporate tax if I claim Small Business Relief?
Yes. Corporate tax registration and filing a (simplified) tax return remain mandatory. Small Business Relief removes the tax liability for the period, not the registration or filing obligations.
What happens if my revenue exceeds AED 3 million in one year?
Small Business Relief becomes permanently unavailable, for that tax period and all future periods, even if revenue later drops back below the threshold. Full corporate tax rules then apply, with 9% tax on taxable income above AED 375,000.
Can free zone companies claim Small Business Relief?
Not if they are Qualifying Free Zone Persons benefiting from the 0% free zone corporate tax rate. A free zone entity that is not a QFZP may be eligible if it meets the other conditions. The choice between QFZP status and SBR should be modelled case by case.
Can I carry forward losses in a year I elect Small Business Relief?
No. Tax losses and disallowed net interest expenditure arising in an elected period cannot be carried forward. Losses from periods where the relief was not elected can be carried forward for use in future non-elected periods, one reason loss-making businesses sometimes choose not to elect.
Where can I read the official decision?
Ministerial Decision No. 131 of 2026 is published by the UAE Ministry of Finance (mof.gov.ae), alongside Ministerial Decision No. 73 of 2023 and the Federal Tax Authority's Small Business Relief guide (CTGSBR1). You can also open the full text here (PDF).
Sources: Ministerial Decision No. 131 of 2026 (UAE Ministry of Finance, issued 29 July 2026); Ministerial Decision No. 73 of 2023; Federal Decree-Law No. 47 of 2022 (Corporate Tax Law), Article 21; FTA Corporate Tax Guide on Small Business Relief (CTGSBR1); UAE Ministry of Finance announcement, August 2026.
CA Om Thakkar
Om is a Chartered Accountant at Stevva, advising founders and finance teams on corporate tax, transfer pricing and free-zone structuring in the UAE. He writes Insights to make the rules legible, so business owners can make decisions without a tax background.
Published 7 August 2026. This article is general information, not tax advice. Whether to elect Small Business Relief depends on your specific circumstances: speak to Stevva Tax before filing.