UAE Small Business Relief allows an eligible Resident Person with revenue of no more than AED 3 million in the relevant and all previous tax periods to elect to be treated as having no Taxable Income for that period. It can reduce Corporate Tax compliance work, but it is not automatic and it does not remove registration, filing, or record-keeping obligations.
The Ministry of Finance announced on 7 August 2026 that the relief period has been extended. The AED 3 million threshold now applies to eligible tax periods beginning on or after 1 June 2023 and ending on or before 31 December 2029, subject to the applicable conditions. This guide explains the rules, the election process, the practical trade-offs, and the records a business should prepare.
Last reviewed: 20 August 2026
Table of contents
- What is UAE Small Business Relief?
- Who can claim the relief?
- How the AED 3 million test works
- Who cannot claim it?
- What the relief changes
- Trade-offs to assess
- How to elect in the return
- Records and checklist
- Frequently asked questions
What is UAE Small Business Relief?
Under Article 21 of the Corporate Tax Law, a qualifying Resident Person may elect to be treated as if it did not derive any Taxable Income in the relevant period. That can mean no Corporate Tax is payable and parts of the return are simplified.
The relief is not the same as an exemption from Corporate Tax. An eligible business remains a Taxable Person and must generally:
- register for Corporate Tax where required;
- maintain evidence supporting its revenue and eligibility;
- submit a Corporate Tax return by the applicable deadline;
- make the election for the relevant tax period in that return; and
- retain relevant records and documents.
The Federal Tax Authority's Small Business Relief guide explains the original framework. The Ministry of Finance's August 2026 announcement confirms that the availability period now extends to eligible tax periods ending on or before 31 December 2029.
Who can claim UAE Small Business Relief?
The election is available to a Taxable Person that is a Resident Person, provided the revenue conditions and other requirements are satisfied. This can include a UAE-incorporated juridical person and a natural person who is treated as a Resident Person and is subject to Corporate Tax on a Business or Business Activity.
Eligibility is tested for each tax period. A business should confirm all of the following before electing:
- It is a Resident Person for Corporate Tax purposes.
- Its revenue does not exceed AED 3 million in the relevant tax period.
- Its revenue did not exceed AED 3 million in any previous tax period beginning on or after 1 June 2023.
- The relevant tax period ends on or before 31 December 2029.
- It is not a Qualifying Free Zone Person.
- It is not a member of an excluded Multinational Enterprise Group.
- Its business has not been artificially separated to remain below the threshold.
A mainland company is not automatically eligible, and a small free-zone company is not automatically excluded. The decisive questions include residency, revenue history, and tax status.
How the AED 3 million revenue test works
The threshold is based on revenue, not accounting profit or Taxable Income. Revenue is the gross amount of income derived during the tax period, determined under the accounting standards accepted in the UAE. Expenses do not reduce revenue for this test.
For example, a company with AED 2.8 million of revenue and AED 2.6 million of expenses remains below the revenue threshold. A company with AED 3.2 million of revenue and an accounting loss exceeds it, despite making no profit.
The test looks backwards as well as at the current period. If revenue exceeded AED 3 million in any earlier relevant tax period, the business cannot return to Small Business Relief merely because its revenue later falls below the threshold.
Consider a calendar-year company with the following revenue:
- 2024: AED 2.4 million;
- 2025: AED 3.2 million; and
- 2026: AED 2.1 million.
The company may have been eligible for 2024, subject to the other rules. It would not be eligible for 2025 because it exceeded the threshold, and it cannot claim the relief for 2026 or a later period because a previous relevant period exceeded AED 3 million.
Revenue must be tested separately for every tax period, including a short period, and reconciled to reliable accounting records.
What changed in 2026?
Ministerial Decision No. 73 of 2023 originally limited the relief to tax periods ending on or before 31 December 2026. The Ministry of Finance announced Ministerial Decision No. 131 of 2026, extending the end date to 31 December 2029. The published announcement states that the AED 3 million threshold continues to apply.
The extension does not reset the historical revenue test. A business that already exceeded AED 3 million in a relevant prior period does not regain eligibility.
Who cannot claim Small Business Relief?
The relief is not available to a Qualifying Free Zone Person. A free-zone business therefore needs to determine its Corporate Tax status carefully rather than assuming that its location decides the answer. A free-zone entity that is not a Qualifying Free Zone Person may potentially qualify if all other conditions are met.
It is also unavailable to a member of a Multinational Enterprise Group required to prepare a country-by-country report under the applicable UAE rules. The Ministry of Finance describes this excluded category by reference to groups operating in more than one country with consolidated group revenue above the specified threshold.
The rules also address artificial separation. If a business or Business Activity has been divided among persons mainly to keep each person's revenue within AED 3 million, the FTA may treat that arrangement as an attempt to obtain a Corporate Tax advantage under the general anti-abuse rule.
Businesses with connected entities should document their commercial structure and ensure transactions between Related Parties and Connected Persons follow the arm's-length principle.
What Small Business Relief changes
When a valid election is made, the eligible Resident Person is treated as having no Taxable Income for that period and can submit a simplified return.
The election can also provide relief from the obligation to maintain transfer-pricing documentation in the form of a master file and local file for that period. It does not remove the requirement for Related Party and Connected Person transactions to meet the arm's-length principle, and applicable disclosure requirements still need attention.
Small Business Relief does not cancel VAT or other regulatory obligations. VAT turnover tests and the Corporate Tax revenue test serve different purposes.
It also does not change the general Corporate Tax filing deadline. A return and any Corporate Tax payable are generally due within nine months after the end of the relevant tax period. Our UAE Corporate Tax filing guide explains the wider return process and preparation steps.
Small Business Relief trade-offs
Electing can be beneficial, but the decision should not be based only on whether current tax becomes nil. The business should compare the simplified result with the tax attributes it may need later.
Tax losses
A business cannot accrue a Tax Loss for a period in which it elects for Small Business Relief. Tax Losses carried forward from periods before the election are not lost solely because the relief is claimed; they remain available for use in a later period, subject to the Corporate Tax rules.
For a loss-making start-up, the immediate simplification should be weighed against the potential future value of that loss.
Net Interest Expenditure
Disallowed Net Interest Expenditure cannot be accumulated from a period for which the relief is elected. Amounts brought forward from an earlier period can generally remain available for a later period in which the relief is not elected, subject to the relevant limitations.
Reliefs and elections
A person electing for Small Business Relief cannot apply certain other Corporate Tax reliefs for that period, including Qualifying Group Relief and Business Restructuring Relief. If the business has transferred assets, reorganised operations, or entered into transactions within a group, those consequences should be assessed before making the election.
The best choice can differ between businesses with identical revenue because their tax attributes and future plans differ.
How to claim Small Business Relief
The relief must be elected in the Corporate Tax return for each relevant period. It is not enough to remain below AED 3 million or to mention the intention in internal records.
A practical filing sequence is:
- Confirm the Taxable Person's legal status and tax period.
- Close the accounting records and determine revenue under the applicable accounting standards.
- Compare revenue with the AED 3 million threshold for the current and every previous relevant tax period.
- Confirm that neither excluded category applies.
- Review Related Party arrangements and any risk of artificial separation.
- Compare the election with the value of current-period losses, interest amounts, or other reliefs.
- Complete the Small Business Relief election in the EmaraTax Corporate Tax return.
- Submit the return within nine months after the tax-period end.
- Retain the return, acknowledgement, accounts, revenue reconciliation, and eligibility evidence.
The FTA emphasised in August 2026 that eligible persons still need to register, file on time, and retain supporting documents.
Records needed to support the election
The business should retain evidence of its reported revenue and eligibility, including:
- financial statements and trial balances;
- general-ledger revenue accounts;
- sales invoices, credit notes, and contracts;
- bank statements and payment-processor reports;
- asset-sale records and other income schedules;
- revenue reconciliations for each relevant tax period;
- ownership and group-structure information;
- free-zone status analysis, where relevant;
- Related Party agreements and pricing support; and
- the filed return and EmaraTax acknowledgement.
Corporate Tax records must generally be retained for seven years after the end of the tax period to which they relate. Records should be organised well enough for the FTA to verify revenue, Taxable Income, and entitlement to the relief.
Small Business Relief checklist
- Corporate Tax registration is complete where required.
- The Taxable Person is a Resident Person.
- Revenue for the current period is AED 3 million or less.
- Revenue for every previous relevant period was AED 3 million or less.
- The period begins on or after 1 June 2023 and ends on or before 31 December 2029.
- The person is not a Qualifying Free Zone Person.
- The person is not a member of an excluded Multinational Enterprise Group.
- The structure does not involve artificial separation of one business.
- Revenue is reconciled to reliable accounting and transaction records.
- Tax-loss, interest, restructuring, and group-relief trade-offs have been reviewed.
- Related Party and Connected Person obligations have been considered.
- The election is completed in the Corporate Tax return.
- The simplified return is reviewed and submitted before the deadline.
- Supporting records will be retained for the required period.
Frequently asked questions
Is UAE Small Business Relief automatic?
No. An eligible Resident Person must elect for the relief in its Corporate Tax return for the relevant period. Remaining below the threshold alone does not activate it.
Has Small Business Relief been extended beyond 2026?
Yes. The Ministry of Finance announced on 7 August 2026 that the relief period was extended to eligible tax periods ending on or before 31 December 2029. The AED 3 million revenue threshold continues to apply.
Does revenue of exactly AED 3 million qualify?
Yes, subject to all other conditions. The rule applies where revenue does not exceed AED 3 million, so revenue equal to the threshold can qualify. Revenue above it cannot.
Can a free-zone company claim the relief?
A Qualifying Free Zone Person cannot claim it. A free-zone entity that is not a Qualifying Free Zone Person may potentially qualify if it is a Resident Person and satisfies the revenue and other conditions.
Do I still file a Corporate Tax return if I claim the relief?
Yes. The election is made through the return, and the eligible business files a simplified Corporate Tax return. Registration, filing, and record retention remain relevant.
Can I claim relief after exceeding AED 3 million in an earlier period?
No. Once revenue exceeds AED 3 million in a relevant tax period, Small Business Relief is unavailable for subsequent periods, even if revenue later falls below the threshold.
Make the election with the future periods in view
Small Business Relief can reduce immediate tax and simplify compliance for an eligible business. The right decision still requires a reliable revenue history, a clear status assessment, and a comparison of the relief against Tax Losses, interest amounts, and other elections that may matter later.
Important: This article provides general information only and is not a substitute for advice based on your business's specific tax, legal, or financial position.
Accuverse supports UAE businesses with Corporate Tax eligibility reviews, revenue reconciliations, election analysis, and return preparation. To review whether Small Business Relief fits your current and future position, contact Accuverse for advice tailored to your business.