How does Small Business Relief work under UAE corporate tax?
Small Business Relief lets an eligible UAE resident business elect, in its Corporate Tax return, to be treated as having no taxable income. Revenue must be AED 3,000,000 or less in the period and every earlier one. Qualifying Free Zone Persons and MNE constituent companies are excluded. It applies to periods ending by 31 December 2029. [1][2][3]
Key takeaways
- Revenue must be AED 3,000,000 or less in the relevant tax period and in all previous tax periods; once you exceed it, you cannot elect. [1][4]
- The relief is optional. You elect in the Tax Return for each tax period, and you must be registered for Corporate Tax first. [4][5]
- Ministerial Decision No. 131 of 2026 extends the threshold to tax periods ending on or before 31 December 2029. [2][3]
- Qualifying Free Zone Persons and constituent companies of a Multinational Enterprise group cannot elect. [1][4]
- Electing means giving up other reliefs, and tax losses made in an election year cannot be carried forward. [1][5]
Who can claim Small Business Relief?
Only a Resident Person, whether a natural person or a juridical person, can elect, and its Revenue must not exceed AED 3,000,000 in the relevant tax period and in each previous tax period. [4][5] The Ministerial Decision sets that figure "for each Tax Period". [1] Revenue is determined under the applicable accounting standards accepted in the UAE. [1]
The FTA guide defines Revenue as the gross amount of income derived during a Tax Period. [4] It adds that VAT collected is not included in the calculation of Revenue, and that the relief does not change your VAT obligations. [4] Our guide to the VAT registration threshold covers the separate VAT tests.
Does the AED 3 million revenue cap expire?
The cap is time-limited, but the end date has moved. The original Decision applied it to tax periods starting on or after 1 June 2023 and ending on or before 31 December 2026. [1] Ministerial Decision No. 131 of 2026 replaced that clause so the threshold continues for subsequent tax periods ending on or before 31 December 2029. [2][3]
The FTA's Small Business Relief guide is dated August 2023 and still refers to periods ending on or before 31 December 2026. [4] It predates Decision No. 131, so we follow the Decision and the Ministry of Finance announcement, which is dated 7 August 2026. [2][3] Confirm the position with the FTA before you rely on it for a later period.
One rule catches many owners out. If your Revenue exceeds AED 3,000,000 in any tax period, you cannot elect, even if Revenue falls back under the cap later. [1][4]
Who is excluded from Small Business Relief?
A Resident Person cannot elect if it is a constituent company of a Multinational Enterprise group or a Qualifying Free Zone Person. [1] This applies even where its Revenue is under AED 3,000,000. [4]
The FTA guide describes the MNE groups concerned as those with total consolidated group revenue of more than AED 3.15 billion that are required to prepare a Country-by-Country Report. [4] For free zones, the guide says Free Zone Persons that are not Qualifying Free Zone Persons can elect if they meet the other conditions. A Qualifying Free Zone Person that elects to be taxed under Article 19 of the Corporate Tax Law for a period is then treated as a Free Zone Person and can elect if it meets the requirements. [4] See our guide to Qualifying Free Zone Person status for the 0 percent regime.
How do you elect for Small Business Relief in the return?
You elect in your Corporate Tax Return, and the election must be made for each tax period for which you want the relief. [4] A Tax Return is filed online through EmaraTax, within 9 months of the end of the tax period. [6] The steps are:
- Register for Corporate Tax and obtain a TRN, because the election can only be made in a Tax Return. [4] Our guide to Corporate Tax registration in the UAE explains this step.
- Keep information that shows you are eligible, including records of your Revenue. [4] See bookkeeping and record-keeping requirements in the UAE.
- Start the Tax Return in your EmaraTax account. The return guide says the Small Business Relief fields do not appear if you do not meet the requirements. [6]
- Elect for the relief in the Small Business Relief section of the return and complete the simplified return. [4][6]
- Submit within the 9-month deadline. [6]
Do not skip the election. Once the return for a period has been submitted without it, the FTA guide says there is no possibility to claim the benefit later. [4]
What do you gain and give up by electing?
An electing business is treated as not having derived any Taxable Income in that tax period, so it does not calculate Taxable Income or pay Corporate Tax for it. [4][5] The guide also says electing businesses benefit from simplified return filing and record keeping, including preparing financial statements on a cash basis. [4]
The trade-offs matter, as the table shows.
| Area | If you elect |
|---|---|
| Corporate Tax registration | Still required [4] |
| Tax return | Simplified return, not a full return [4] |
| Tax losses | Losses incurred in an election year cannot be carried forward [1] |
| Earlier losses | Unused losses from years without an election can be carried forward to later years without an election, subject to Article 37 of the Corporate Tax Law [1] |
| Net interest expenditure | Not carried forward from an election year [1] |
| Other reliefs and deductions | Not available [5] |
| Transfer pricing documentation | Not required, but the arm's length principle still applies [4][5] |
| VAT | Obligations unchanged [4] |
Because losses in an election year are lost, a start-up expecting losses may prefer not to elect. Whether that is wise depends on your numbers.
Can you split a business to stay under the cap?
Not safely. Where the FTA establishes that persons have artificially separated their business or activity, and total Revenue across the whole business exceeds AED 3,000,000 in any tax period, electing for the relief is treated as an arrangement to obtain a Corporate Tax advantage under Article 50 of the Corporate Tax Law. [1]
In deciding this, the FTA considers whether there was a valid commercial purpose and whether the persons carry on substantially the same business or activity, taking account of financial, economic and organisational links. [1]
How GCC Filings can help
GCC Filings Bookkeeping LLC is a Dubai firm. Its Corporate Tax Registration & Advisory Services cover Corporate Tax registration, tax assessment, transfer pricing and annual filing under Federal Decree-Law No. 47. If you think you may qualify for Small Business Relief, we can talk through your situation and your numbers.
You can also see our wider Corporate Tax services or browse all services, or read more on the blog. To get in touch, call +971 4 557 4802, email [email protected], or visit Office 2403, East Wing, Latifa Towers, Sheikh Zayed Road, Dubai.
Limits of this guide
Tax rules, thresholds and deadlines change, and your facts may differ. Always confirm the current position on the Federal Tax Authority website at tax.gov.ae. This article is general information and not tax or legal advice.
Frequently asked questions
Is Small Business Relief automatic in the UAE?
No. The FTA guide describes it as an optional relief that eligible Resident Persons must elect for in their Tax Return, for each tax period. If the return is submitted without the election, there is no possibility to claim the benefit later. You must also be registered for Corporate Tax first. [4]
What is the Small Business Relief revenue limit?
The Ministerial Decision sets the threshold at AED 3,000,000 for each tax period. Revenue must be at or under that figure in the relevant tax period and every previous one. If it exceeds the threshold in any period, the business cannot elect, and Revenue is measured under accounting standards accepted in the UAE. [1]
Is Small Business Relief available after 2026?
Ministerial Decision No. 131 of 2026 says the threshold continues for subsequent tax periods that end on or before 31 December 2029. The Ministry of Finance announcement confirms the extension. Older FTA guidance still refers to 2026, so check the FTA site for the latest position before filing. [2][3][4]
Can a free zone company claim Small Business Relief?
Not if it is a Qualifying Free Zone Person, which the Decision excludes. The FTA guide says Free Zone Persons that are not Qualifying Free Zone Persons can elect if they are resident and meet the revenue test. A Qualifying Free Zone Person that elects to be taxed under Article 19 can also elect. [1][4]
Do I still need to register for Corporate Tax if I qualify?
Yes. The FTA guide says a business must register and obtain a TRN to make the election, because the election is made in the Tax Return. It lists registration as required whether or not you elect. Qualifying for the relief does not remove your registration duty. [4]
Do I need financial statements if I elect for the relief?
The FTA return guide says financial statements are mandatory to attach to the Tax Return unless you have made an election for Small Business Relief. The Small Business Relief guide adds that electing businesses can prepare financial statements on a cash basis. Records showing your Revenue should still be kept. [4][6]
Sources
- Ministry of Finance (UAE). Ministerial Decision No. 73 of 2023 on Small Business Relief for the Purposes of Federal Decree-Law No. 47 of 2022, 2023. https://mof.gov.ae/wp-content/uploads/2023/04/Ministerial-Decision-No.-73-of-2023-on-Small-Business-Relief-for-the-Purposes-of-Federal-Decree-Law-No.-47-of-2022.pdf
- Ministry of Finance (UAE). Ministerial Decision No. 131 of 2026 Amending Certain Provisions of Ministerial Decision No. 73 of 2023, 2026. https://mof.gov.ae/wp-content/uploads/2026/08/Ministerial-Decision-No.-131-of-2026-Amending-Certain-Provisions-of-Ministerial-Decision-No.-73-of-2023-on-Small-Business-Relief-for-the-Purposes-of-Federal-Decree-Law-No.-47-of-2022-EN.pdf
- Ministry of Finance (UAE). Ministry of Finance Announces Extension of Small Business Relief for Corporate Tax Purposes until 31 December 2029, 2026. https://mof.gov.ae/en/news/ministry-of-finance-announces-extension-of-small-business-relief-for-corporate-tax-purposes-until-31-december-2029/
- Federal Tax Authority (UAE). Small Business Relief Corporate Tax Guide (CTGSBR1), 2023. https://tax.gov.ae/DataFolder/Files/Guides/CT/Small%20Business%20Relief%20Guide%20-%20EN%20-%2027%2008%202023.pdf
- Federal Tax Authority (UAE). Small Business Relief (Corporate Tax) topic page, 2026. https://tax.gov.ae/en/taxes/corporate.tax/corporate.tax.topics/small.business.relief.23.aspx
- Federal Tax Authority (UAE). Tax Returns Corporate Tax Guide (CTGTXR1), 2024. https://tax.gov.ae/Datafolder/Files/Guides/CT/CT-Returns-EN-11-11-2024.pdf
Accessed 20 October 2026. General information only; confirm current rules with the FTA.