Small Business Relief to 2029 is now law. The UAE Ministry of Finance has extended the relief so that resident businesses with revenue of AED 3 million or less can keep electing it for tax periods ending on or before 31 December 2029, instead of 31 December 2026.
For owners of small companies and sole establishments, that means three more years of planning certainty. It does not mean the end of registration, returns, or bookkeeping. If you want our team to review your position, our corporate tax and VAT services in the UAE cover registration, relief elections, and return filing.
This guide is written by the corporate tax team at Exactitude Business Services, drawing on 14+ years in the UAE. It explains what the official decision says, who qualifies, what you give up when you elect, and how to keep records that will stand up if the Federal Tax Authority (FTA) asks questions.
What Small Business Relief to 2029 Means
Small Business Relief is an election under Article 21 of the Corporate Tax Law. An eligible business that elects is treated as having no Taxable Income for that tax period. In practice, that means no Corporate Tax to pay for the period and a simplified Tax Return.
The relief reduces the tax and compliance burden on start-ups and micro businesses. The Ministry of Finance said this when it first issued the rules in 2023, and repeated it in 2026 when it announced the extension.
The original rule under Ministerial Decision No. 73 of 2023
Ministerial Decision No. 73 of 2023 set the details. It fixed the revenue threshold at AED 3,000,000 per tax period. It applied the threshold to tax periods starting on or after 1 June 2023, and to later periods ending on or before 31 December 2026.
Under that version, a calendar-year business could claim the relief for 2024, 2025 and 2026. After that, the relief would have ended.
What Ministerial Decision No. 131 of 2026 changed
Ministerial Decision No. 131 of 2026 was issued on 29 July 2026 and announced by the Ministry of Finance on 7 August 2026. It replaces one clause of the 2023 decision. The new wording says the threshold applies to tax periods starting on or after 1 June 2023 and continues to apply to later tax periods that end on or before 31 December 2029.
The key points are simple:
- The end date moved from 31 December 2026 to 31 December 2029.
- The revenue threshold is still AED 3,000,000. The 2026 decision did not change it.
- The other conditions in the 2023 decision, including the exclusions and the anti-abuse rule, were not amended.
One practical warning. Some FTA guidance published before the extension, including the Small Business Relief guide from August 2023, still refers to 31 December 2026. The later Ministerial Decision is what changed the end date, so read older guidance with that in mind.
Which tax periods are now covered
The test is the date your tax period ends. If it ends on or before 31 December 2029, it can fall within the relief, provided you meet the other conditions.
- Calendar-year businesses: tax periods for 2027, 2028 and 2029 are now within the window.
- Businesses with a different year-end: a tax period ending, for example, on 30 June 2029 is within the window. A period ending on 30 June 2030 ends after 31 December 2029, so on the current wording it falls outside.
If your financial year does not follow the calendar, check the end date of each future period carefully before you plan around the relief.
Who Can Claim Small Business Relief to 2029
Only Resident Persons can elect. That includes UAE companies and natural persons who are taxable because of their business activity. Non-resident persons cannot use the relief.
The AED 3 million revenue test
To elect for a tax period, your revenue must be AED 3,000,000 or less in that period and in every previous tax period. This second part catches many owners by surprise.
- Revenue means the gross amount of income derived in the tax period, not profit.
- It includes all sales and other gross income, such as income from selling an asset.
- If revenue goes above AED 3,000,000 in any tax period, the relief is no longer available, even if revenue falls back below the threshold later.
- A one-off event that pushes revenue over the line still counts. The FTA guide gives this exact example.
Revenue is measured under the accounting standards accepted in the UAE. That is IFRS or IFRS for SMEs, or the cash basis of accounting where revenue does not exceed AED 3,000,000. The FTA can challenge the choice if the outcome is unreasonable.
Businesses that cannot elect
Two groups are excluded, whatever their revenue:
- Qualifying Free Zone Persons. A free zone company that benefits from the 0% rate on qualifying income cannot also elect Small Business Relief.
- Members of Multinational Enterprise Groups with total consolidated group revenue of more than AED 3.15 billion. A small UAE subsidiary of a large group stays excluded even if its own revenue is low.
Tax groups and free zone persons that are not qualifying
A free zone person that is not a Qualifying Free Zone Person can elect, provided it is resident and meets the revenue test. The same applies to a qualifying free zone person that has elected to be subject to the regular Corporate Tax rates.
A Tax Group is treated as one Taxable Person. The AED 3,000,000 threshold applies to the group as a whole, not to each member. Several small companies inside one Tax Group can therefore lose access to the relief together.
How the Election Works in Your Corporate Tax Return
Small Business Relief to 2029 is not automatic. You claim it in your Corporate Tax Return, and you must claim it again for each tax period.
Here is the sequence the FTA expects:
- Register for Corporate Tax and obtain your Tax Registration Number (TRN).
- Keep records that prove your revenue for the period and for earlier periods.
- File your Corporate Tax Return within 9 months of the end of the tax period.
- Make the Small Business Relief election in that return.
- Repeat the election in each later return where you still qualify.
Once a return is submitted without the election, the FTA guide notes that the opportunity for that period is lost. That is why we review the election before every filing.
Registration still comes first
Electing the relief does not remove the duty to register. The FTA guide is clear that a business that elects remains a Taxable Person and must register, file a return, and keep records.
Late registration carries an administrative penalty of AED 10,000. Our guide on how to avoid the AED 10,000 corporate tax registration penalty explains the deadlines in more detail.
At the time of writing, the FTA’s published guidance describes a Corporate Tax Late Registration Penalty Waiver Initiative:
- The penalty is waived if the first Tax Return, or annual declaration for exempt persons, is filed within 7 months from the end of the first tax period.
- It applies only to the first tax period.
- It covers businesses that registered late, have not yet registered, or have been charged the penalty.
- Where the conditions are met, the waiver is applied automatically. A penalty already paid is credited back to the EmaraTax account.
If you are already late, act on the first return deadline rather than waiting. The 7-month window is shorter than the normal 9-month filing period.
Filing deadlines do not move
The relief changes what goes into the return. It does not change when the return is due. A business that elects still files within 9 months of its tax period end, every year.
What You Give Up When You Elect
Being treated as having no Taxable Income has consequences. Several Corporate Tax rules simply switch off for that period. Understanding them is the difference between a sensible election and a costly one.
Tax losses and carried-forward losses
In a tax period where you elect, you cannot create, use or transfer Tax Losses.
- Losses carried forward from earlier periods without the relief are not lost.
- They stay on hold and can be used in a later period where you have Taxable Income and do not elect.
- A loss incurred during an elected period never becomes a usable Tax Loss.
For a business that expects early losses and later profits, this matters. Electing in a loss-making year means that loss cannot be carried forward.
Net interest expenditure
The General Interest Deduction Limitation Rule does not apply in an elected period. Disallowed net interest expenditure carried forward from earlier non-elected periods stays on hold for later use, under the same logic as losses.
Other reliefs and exemptions
Other reliefs are also unavailable while you elect. The FTA guide lists transfers of assets at net book value within a Qualifying Group and Business Restructuring Relief among them. The rules on Exempt Income are not relevant either, because no Taxable Income is calculated.
Transfer pricing
Businesses that elect do not need to maintain transfer pricing documentation. They must still follow the arm’s length principle in dealings with related parties and connected persons.
Is Electing Always the Right Call?
For many small businesses, yes. For some, the answer needs thought.
Without the relief, a resident business pays Corporate Tax at 0% on Taxable Income up to AED 375,000 and 9% on Taxable Income above that amount. A business with modest profits may owe little or nothing under the normal rules anyway. In that case, the election mainly saves compliance effort.
Situations where we look more closely before electing:
- The business is making a loss. Not electing may allow that loss to be carried forward against future profits.
- Revenue is close to AED 3,000,000. Crossing the line once ends access permanently, so growth plans and timing of large contracts matter.
- The business is part of a Tax Group or has related companies, where group revenue and the anti-abuse rule both come into play.
- A restructuring is planned, since restructuring reliefs are not available in an elected period.
The relief is valuable, but it is a choice made period by period. Treat it as a decision, not a default.
Record-Keeping Under Small Business Relief to 2029
The relief rests on one number: your revenue. If the FTA asks, you must be able to prove that revenue did not exceed the threshold in the current period and in earlier periods.
The FTA does not prescribe a fixed list, but its guide gives examples of what to keep:
- Bank statements
- Sales ledgers
- Invoices or other records of daily earnings, such as till rolls
- Order records and delivery notes
- Other relevant business correspondence
Records can be kept electronically, for example by scanning paper receipts, as long as they are readable and available on request. They must be kept for seven years after the end of the tax period they relate to.
Businesses within the threshold may prepare financial statements on the cash basis. Simpler, yes. Careless, no. Our accounting and bookkeeping services keep monthly records organised so that the revenue figure in your return matches your ledgers and bank statements.
The Anti-Abuse Rule on Splitting a Business
Some owners ask whether they can split one business into several companies so that each stays under AED 3,000,000. The answer from the rules is no.
Under Ministerial Decision No. 73 of 2023, if the FTA establishes that a business has been artificially separated and the total revenue of the whole business exceeds AED 3,000,000 in a tax period, this is treated as an arrangement to obtain a Corporate Tax advantage under the general anti-abuse rule. The business would have to pay the Corporate Tax it would otherwise have owed, and penalties may apply.
The FTA guide describes three forms of artificial separation:
- Functional: splitting functions of one business, such as food and drink sales in a restaurant.
- Geographical: separating locations that carry on the same activity, such as a chain of cafes.
- Temporal: running the same business through a series of entities that close as revenue nears the threshold.
The FTA looks at whether the separation has a valid commercial purpose and whether substantially the same business is being carried on. It considers financial, economic and organisational links, such as shared premises, staff, managers, customers and marketing. Operating through more than one company is not wrong in itself. Genuine reasons, such as limiting legal liability or a real franchise arrangement, are recognised.
A Planning Checklist for 2027 to 2029
The extension gives you time. Use it well.
- Confirm your registration status and TRN, and check that all past returns were filed.
- Write down your tax period end dates for the next three years and check each against 31 December 2029.
- Track revenue monthly, so you see early if you are approaching AED 3,000,000.
- Keep any carried-forward losses on file, with the periods they came from.
- Review related companies and Tax Group membership before electing.
- Diary each return deadline, nine months after period end.
- Plan for the period after the relief, since no decision beyond 31 December 2029 has been published.
Setting up a new company? Structure matters from day one. Our business formation team can explain how licence type and free zone status affect your Corporate Tax position before you choose.
A Client’s Experience: Moving From Worry to a Clear Plan
“I run a small consultancy on a mainland licence, and for a long time Corporate Tax felt like something for bigger companies. I heard about Small Business Relief from a friend and assumed it meant I didn’t need to do anything.
When I spoke to Exactitude, the first question was whether I had registered. I hadn’t, and I learned that late registration has its own penalty. They explained the FTA’s waiver conditions, worked out the date my first return had to be filed to meet them, and handled the registration.
The second surprise was my books. My invoices were spread across emails, and my bank statements didn’t match what I thought I had earned. Their bookkeeping team reconciled everything, so I could see my actual revenue for each period and how far it was from the threshold.
When the extension to 2029 was announced, I didn’t panic or celebrate blindly. We sat down and looked at my year-end dates, my growth plans and whether electing made sense each year. Now I get monthly reports, my records are stored properly, and I know what the return will say before it is filed.”
How Exactitude Business Services Helps
We have supported business owners for 14+ years in the UAE, across company setup, banking support, accounting and bookkeeping, PRO services, attestation and visas. For Small Business Relief to 2029, our work typically covers:
- Checking eligibility, including revenue history, exclusions, and related entities
- Corporate Tax registration and TRN follow-up
- Monthly bookkeeping and revenue tracking against the threshold
- Preparing and filing the Corporate Tax Return with the correct election
- Reviewing whether electing or not electing suits the business in each period
- Keeping records ready for any FTA request
For a broader view of your obligations, read our guide to corporate tax and VAT compliance in the UAE.
Book a Free Consultation on Small Business Relief to 2029
The extension is good news, but only for businesses that register on time, keep clean records, and make the election correctly each year. If you are unsure where you stand, talk to us before your next return is due.
Book a Free Consultation with Exactitude Business Services:
- Phone / WhatsApp: +971 52 177 1150
- Email: sales@exactitudebusiness.com
Frequently Asked Questions
Has Small Business Relief really been extended to 2029?
Yes. Ministerial Decision No. 131 of 2026 amended Ministerial Decision No. 73 of 2023. The relief can now be claimed for tax periods ending on or before 31 December 2029.
Did the AED 3 million threshold change?
No. The Ministry of Finance confirmed that the threshold in the 2023 decision continues to apply. Revenue must be AED 3,000,000 or less in the relevant period and all earlier periods.
Is Small Business Relief applied automatically?
No. You must be registered for Corporate Tax and make the election in your Corporate Tax Return for each tax period.
Do I still need to register and file if I qualify?
Yes. A business that elects remains a Taxable Person. It must register, file a simplified return within 9 months of the period end and keep records.
Can a free zone company claim the relief?
A Qualifying Free Zone Person cannot. A free zone person that is not a Qualifying Free Zone Person can elect if it is resident and meets the revenue test.
What happens to my carried-forward losses if I elect?
They are kept but cannot be used in the elected period. They can be used in a later period where you have Taxable Income and do not elect, subject to the normal conditions.
What if my revenue exceeds AED 3 million in a single period?
From that point, the relief is no longer available, even if revenue drops below the threshold in later periods.
What happens after 31 December 2029?
No decision covering later periods has been published. Plan on the basis that tax periods ending after 31 December 2029 are outside the relief unless the Ministry of Finance announces otherwise.