Small Business Relief can reduce the UAE Corporate Tax burden and simplify compliance for eligible small businesses, but it is not an automatic exemption from Corporate Tax.

An eligible Resident Person must make an election for the relevant Tax Period. If the election applies, the business is treated as having no Taxable Income for that Tax Period.

The main Revenue threshold remains AED 3 million.

There has, however, been an important change to how long the relief is available.

Ministerial Decision No. 131 of 2026 amended the original Small Business Relief decision and extended the relief to relevant Tax Periods ending on or before 31 December 2029. The original rules had provided an end date of 31 December 2026.

This update is particularly important because older Federal Tax Authority guidance and many existing online articles still refer to the previous 2026 end date.

For UAE business owners and finance teams, eligibility therefore needs to be assessed using the current 2029 rule rather than the superseded date.

This guide explains who can claim Small Business Relief, how the AED 3 million Revenue test works, who is excluded, how the election affects Tax Losses and other Corporate Tax provisions, and what compliance obligations remain even when no Corporate Tax is payable.

What Is Small Business Relief in the UAE?

Small Business Relief is a Corporate Tax relief available under Article 21 of the UAE Corporate Tax Law.

An eligible Taxable Person that is a Resident Person can elect to be treated as having derived no Taxable Income for the relevant Tax Period where the applicable Revenue and other conditions are met.

That can provide two main benefits:

1. The business does not pay Corporate Tax for that Tax Period under the Small Business Relief treatment.
2. The business benefits from simplified Corporate Tax compliance compared with calculating ordinary Taxable Income.

However, the business remains a Taxable Person.

Small Business Relief does not mean that the company:

• Stops being subject to Corporate Tax.
• Cancels its Corporate Tax registration.
• Stops filing Corporate Tax Returns.
• Stops maintaining accounting records.
• Can ignore Related Party pricing.
• Is permanently exempt from Corporate Tax.

The relief operates on a Tax Period-by-Tax Period basis.

What Is the Current Small Business Relief Revenue Threshold?

The current threshold is:

AED 3,000,000 of Revenue

The Taxable Person’s Revenue must not exceed AED 3 million in:

• The relevant Tax Period; and
• Any previous relevant Tax Period.

The threshold is based on Revenue, not profit. Ministerial Decision No. 73 of 2023 establishes the AED 3 million test, while MD 131/2026 extends the period for which that threshold applies.

Revenue is different from profit

Consider two UAE companies.

Business	Revenue	Expenses	Accounting profit
Company A	AED 2,800,000	AED 1,600,000	AED 1,200,000
Company B	AED 3,400,000	AED 3,300,000	AED 100,000

Company A may potentially satisfy the Small Business Relief Revenue threshold even though it has a substantial profit.

Company B exceeds the Revenue threshold even though its profit is only AED 100,000.

The eligibility test is therefore not based on how much profit the company makes.

How Is Revenue Defined for Small Business Relief?

Revenue is generally the gross amount of income derived during a Tax Period and is determined according to the applicable accounting standards accepted in the UAE.

The FTA’s Small Business Relief guidance explains that Revenue can include the business’s sales as well as other gross income, including income arising from asset sales.

Businesses should therefore avoid checking only the amount shown in one sales account.

The Revenue assessment may require consideration of all relevant business income.

Revenue vs VAT turnover

Do not automatically use the number from the VAT Return as the Small Business Relief Revenue figure.

VAT and Corporate Tax operate under different rules.

Differences may arise from:

• Timing.
• Accounting recognition.
• Transactions outside VAT scope.
• Asset disposals.
• Other income.
• Business activities that receive different VAT treatment.

The company should calculate Corporate Tax Revenue under the applicable Corporate Tax and accounting rules rather than simply copying a VAT figure.

Small Business Relief Is Now Available Until 31 December 2029

This is the most important recent update.

The original Ministerial Decision No. 73 of 2023 stated that the AED 3 million threshold would apply to Tax Periods beginning on or after 1 June 2023 and ending on or before 31 December 2026.

Ministerial Decision No. 131 of 2026 replaced that end-date provision.

The threshold now continues to apply to subsequent Tax Periods that end on or before:

31 December 2029.

Example: Calendar-year company

For a company with a Tax Period running from 1 January to 31 December, eligible periods can therefore include:

• Year ending 31 December 2024.
• Year ending 31 December 2025.
• Year ending 31 December 2026.
• Year ending 31 December 2027.
• Year ending 31 December 2028.
• Year ending 31 December 2029.

The business still needs to satisfy the Revenue and other eligibility conditions for each relevant Tax Period.

Be careful with older FTA guidance

The FTA’s detailed Small Business Relief Guide was originally issued in 2023.

It therefore contains references to the former 31 December 2026 end date.

Those passages should now be read together with Ministerial Decision No. 131 of 2026.

The other principles in the guide remain useful where they have not been superseded by later legislation, but the current relief period extends to Tax Periods ending on or before 31 December 2029.

Who Can Elect for Small Business Relief?

The starting requirement is that the Taxable Person must be a Resident Person for UAE Corporate Tax purposes.

This can include eligible:

• UAE resident juridical persons.
• Natural Persons conducting a Business or Business Activity that falls within Corporate Tax.
• Tax Groups, where the applicable group-level conditions are met.
• Certain Free Zone Persons that are not Qualifying Free Zone Persons.

The business must also satisfy the AED 3 million Revenue threshold.

The relief is optional.

Meeting the threshold does not automatically apply Small Business Relief to the business.

Does the Business Need to Elect for Small Business Relief?

Yes.

The business needs to make the Small Business Relief election through its Corporate Tax Return for the relevant Tax Period.

The election is made separately for each Tax Period.

The FTA’s guidance states that the eligible Taxable Person must first register for Corporate Tax and then elect for Small Business Relief through its Tax Return.

This means:

Eligibility ≠ automatic relief.

A business may satisfy the Revenue test but still need to actively elect for the relief.

Do Businesses Using Small Business Relief Still Need Corporate Tax Registration?

Yes.

An eligible business must still register for Corporate Tax where it is required to do so.

Small Business Relief is claimed through the Corporate Tax system.

A business therefore cannot use the relief as a reason for failing to register.

The practical sequence is:

Corporate Tax registration

↓

Accounting records maintained

↓

Revenue eligibility assessed

↓

Corporate Tax Return prepared

↓

Small Business Relief election made

↓

Simplified return filed

Businesses should include Small Business Relief in their wider Corporate Tax Compliance Checklist rather than treating it as a replacement for annual compliance.

Do Businesses Using Small Business Relief Still Need to File a Corporate Tax Return?

Yes.

This is one of the most common misconceptions.

The FTA confirmed again in September 2026 that Taxable Persons eligible for Small Business Relief are still required to:

• Register for Corporate Tax.
• File a simplified Corporate Tax Return.
• Maintain records supporting the information reported.
• Comply with the applicable filing deadline.

The general Corporate Tax filing deadline remains nine months from the end of the relevant Tax Period.

Example

Assume a company has a Tax Period ending on:

31 December 2026

Its general filing deadline would be:

30 September 2027

subject to any specific legislative change or relief applicable to the Taxable Person.

Even where the Small Business Relief election results in no Corporate Tax payable, the return must still be filed.

Who Cannot Claim Small Business Relief?

There are two key categories specifically excluded from electing for Small Business Relief.

1. Qualifying Free Zone Persons

A Qualifying Free Zone Person cannot elect for Small Business Relief while applying the QFZP regime.

This applies even if its Revenue is below AED 3 million.

The reason is that the Qualifying Free Zone regime already operates under its own specific Corporate Tax framework.

2. Certain members of Multinational Enterprise Groups

A Constituent Company of a Multinational Enterprise Group within the relevant Country-by-Country Reporting framework cannot elect for Small Business Relief.

The relevant MNE Group threshold is consolidated group Revenue above AED 3.15 billion.

This exclusion prevents large multinational groups from using the relief merely because one UAE entity individually earns less than AED 3 million.

Can a Free Zone Company Claim Small Business Relief?

Potentially, but the distinction between a Free Zone Person and a Qualifying Free Zone Person matters.

A Qualifying Free Zone Person cannot elect for Small Business Relief.

However, the FTA’s guidance explains that a Free Zone Person that is not a QFZP can potentially elect if it is a Resident Person and satisfies the other Small Business Relief requirements.

Businesses should therefore avoid the statement:

“Free Zone companies cannot use Small Business Relief.”

That is too broad.

The correct question is whether the company is applying the QFZP regime.

What Happens If Revenue Exceeds AED 3 Million in One Tax Period?

This is a critical rule.

If the Taxable Person’s Revenue exceeds AED 3 million in a relevant or previous Tax Period, it cannot elect for Small Business Relief in a later period merely because its Revenue falls below AED 3 million again.

The FTA states this clearly in its current Corporate Tax topic guidance.

Example

Assume a company has the following Revenue:

Tax Period	Revenue
2025	AED 2,300,000
2026	AED 3,400,000
2027	AED 2,100,000

For 2025, the company may potentially elect if all other conditions are satisfied.

In 2026, it exceeds the AED 3 million threshold.

The business cannot simply return to Small Business Relief in 2027 because Revenue dropped back to AED 2.1 million.

The previous breach remains relevant.

Is the AED 3 Million Threshold Tested Separately Each Year?

Eligibility must be reviewed for each Tax Period, but the test includes historical Revenue.

A business should therefore maintain a Revenue history such as:

Tax Period	Revenue	Above AED 3m?	SBR eligibility status
2025		Yes / No
2026		Yes / No
2027		Yes / No
2028		Yes / No
2029		Yes / No

This prevents a finance team from looking only at the current year and overlooking an earlier threshold breach.

Can a Tax Group Elect for Small Business Relief?

Potentially.

For Small Business Relief purposes, a Tax Group is treated as a single Taxable Person.

Therefore, the AED 3 million Revenue threshold applies to the Tax Group as a whole, rather than separately to each company within the Tax Group.

The FTA guidance specifically confirms this treatment.

Example

Assume three companies within a Corporate Tax Group have consolidated Revenue after the applicable group treatment of:

• Company A: AED 1,200,000
• Company B: AED 900,000
• Company C: AED 1,100,000

Total:

AED 3,200,000

Each individual company may be below AED 3 million.

However, the Tax Group as one Taxable Person exceeds the threshold.

It would therefore not qualify on the basis of testing each company separately.

Can a Natural Person Claim Small Business Relief?

Potentially, yes.

The relief is available to eligible Resident Persons, which can include natural persons.

However, the individual first needs to fall within the Corporate Tax rules applicable to natural persons conducting Business or Business Activities.

The FTA Small Business Relief guide provides an example of a natural person whose business Revenue is above the relevant Corporate Tax natural-person threshold but remains below AED 3 million and who can therefore potentially elect for Small Business Relief.

Personal investment, employment income and other activities outside Corporate Tax should not be confused with Business Revenue subject to the Corporate Tax regime.

What Does Small Business Relief Actually Do?

Where the election applies, the eligible Resident Person is treated as having no Taxable Income for that Tax Period.

This means it does not need to calculate ordinary Taxable Income in the same way as a business that does not elect.

The simplified treatment can reduce both:

• Corporate Tax payable.
• Compliance work involved in calculating Taxable Income.

However, there are trade-offs.

Several Corporate Tax provisions do not apply during a Small Business Relief Tax Period because the business is treated as having no Taxable Income. Article 21 specifically switches off specified rules concerning Exempt Income, reliefs, deductions, Tax Loss relief and Transfer Pricing documentation obligations under Article 55.

That can make the decision to elect more important than simply asking:

“Will our tax bill become zero?”

Small Business Relief vs the Normal AED 375,000 0% Corporate Tax Rate

These are not the same rule.

Under the standard Corporate Tax regime, an ordinary Taxable Person generally applies:

• 0% to the portion of Taxable Income up to AED 375,000.
• 9% to Taxable Income above AED 375,000.

Small Business Relief uses a different test.

It focuses on Revenue of no more than AED 3 million and, where elected, treats the eligible Resident Person as having no Taxable Income for that period.

Example

Consider a company with:

• Revenue: AED 2,500,000.
• Accounting profit: AED 900,000.

If eligible and it elects for Small Business Relief, it may be treated as having no Taxable Income for that period.

If it does not elect, it would need to calculate its Taxable Income under the ordinary Corporate Tax rules.

The AED 3 million figure is therefore not another Corporate Tax rate band.

It is an eligibility threshold for a specific relief.

Is Small Business Relief Always the Best Choice?

No.

An eligible company should not assume that the election is automatically the best tax decision.

One of the most important areas to consider is Tax Losses.

How Does Small Business Relief Affect Tax Losses?

Where a business elects for Small Business Relief for a Tax Period, any Tax Loss arising in that Tax Period cannot be carried forward to future periods.

This is expressly provided by Ministerial Decision No. 73 of 2023.

Example: Loss-making business

Assume a company has:

• Revenue: AED 2,500,000.
• Expenses: AED 3,200,000.
• Accounting result: AED 700,000 loss.

The Revenue threshold may make the business eligible for Small Business Relief.

However, if it elects for the relief, it is treated as having no Taxable Income and does not create a Tax Loss under the normal rules that can be carried forward from that Tax Period.

If the business expects significant profits in future periods, management should consider whether preserving an available Tax Loss could be more valuable than electing for Small Business Relief in the current loss-making year.

The decision requires facts and calculations.

What about Tax Losses from earlier periods?

Tax Losses generated in an earlier Tax Period in which Small Business Relief was not elected are not automatically lost merely because the business elects in a later period.

They can remain carried forward and may potentially be used in a later Tax Period in which the business has Taxable Income and does not elect for Small Business Relief, subject to the normal Tax Loss conditions.

What Happens to Net Interest Expenditure?

A similar principle applies to relevant Net Interest Expenditure.

Where Small Business Relief is elected for a Tax Period, Net Interest Expenditure from that period cannot be carried forward under the General Interest Deduction Limitation Rule.

However, eligible amounts carried forward from earlier periods in which Small Business Relief was not elected can remain available for a later non-SBR period, subject to the applicable Corporate Tax rules.

For many small businesses this may not create a major issue.

For a heavily financed business, it may be more significant.

Can a Business Use Other Corporate Tax Reliefs at the Same Time?

Several other relief provisions do not apply in a Tax Period for which Small Business Relief is elected.

For example, the FTA guidance explains that provisions relating to areas such as:

• Qualifying Group Relief.
• Business Restructuring Relief.
• Certain deductions.
• Exempt Income treatment.

do not operate in the normal way during an SBR period because the company is treated as having no Taxable Income.

This matters where a small company is undertaking a restructuring, transferring assets or holding investments.

The election should therefore be reviewed alongside any significant transaction planned for that Tax Period.

Does Small Business Relief Remove Transfer Pricing Requirements?

It reduces the formal documentation burden, but it does not remove the arm’s length principle.

The FTA’s current Corporate Tax summary states that a person electing for Small Business Relief does not have the same Transfer Pricing documentation requirement, while it still needs to comply with the arm’s length principle.

That distinction is important.

A small company should not conclude that it can charge arbitrary prices to:

• Owners.
• Related companies.
• Group entities.
• Connected Persons.

Related Party transactions should still reflect an arm’s length basis.

What Records Must a Business Keep When Claiming Small Business Relief?

Small Business Relief simplifies filing, but it does not eliminate record keeping.

The business needs sufficient records to demonstrate:

• Its Revenue.
• Eligibility for the relief.
• Accuracy of the information in the Corporate Tax Return.
• Relevant transactions and accounting information.

The FTA confirmed again in September 2026 that eligible businesses must retain documents that allow the Authority to verify Revenue, Taxable Income and eligibility for the relief.

Useful records can include:

• Sales records.
• Accounting ledger.
• Bank statements.
• Customer invoices.
• Asset records.
• Liability records.
• Ownership records.
• Financial statements or accounting records.
• Other evidence supporting Revenue.

The exact documentation depends on the business.

How Long Must Small Business Relief Records Be Kept?

Corporate Tax records should generally be retained for seven years following the end of the Tax Period to which they relate.

The Small Business Relief election does not shorten that period.

The FTA’s detailed guide confirms that record-keeping obligations remain even where the simplified return applies.

A business should therefore avoid the mistake of thinking:

“We paid no Corporate Tax, so we can delete the files.”

The FTA may still need to verify that the business was genuinely eligible for the relief.

Does a Business Need Audited Financial Statements to Claim Small Business Relief?

Small Business Relief itself does not create a universal requirement for every eligible business to obtain audited Financial Statements.

Whether audited Financial Statements are required depends on the separate Corporate Tax rules applicable to the Taxable Person.

A small mainland company should therefore assess the audit requirement independently.

Similarly, a company should not assume that electing for Small Business Relief removes an audit requirement imposed by another law, licensing authority or contractual arrangement.

Can a Business Split Into Several Companies to Stay Below AED 3 Million?

Businesses should be very careful with artificial separation.

Ministerial Decision No. 73 of 2023 specifically addresses arrangements where one Business or Business Activity is artificially separated across multiple Persons and the combined Revenue exceeds the Small Business Relief threshold.

Where the FTA establishes that artificial separation has been used to obtain a Corporate Tax advantage, the arrangement can be addressed under the Corporate Tax anti-abuse framework.

The FTA can consider factors such as:

• Financial links.
• Economic links.
• Organisational links.
• Whether substantially the same Business is being conducted.
• Whether there is a valid commercial purpose for the structure.

Example

Suppose one consulting business would generate AED 4.5 million of Revenue.

The owner creates two entities:

• Company A: AED 2.2 million.
• Company B: AED 2.3 million.

Both have:

• The same management.
• The same office.
• The same employees.
• The same customers.
• The same business activity.

If the only reason for the separation is to place both companies below AED 3 million and claim Small Business Relief, the arrangement can create serious Corporate Tax risk.

This does not mean that businesses cannot legitimately operate multiple companies.

The question is whether the separation has a real commercial basis or has been artificially designed to obtain the tax advantage.

Practical Small Business Relief Eligibility Test

A business can use the following decision process before filing.

Question 1: Are you a Resident Person for Corporate Tax?

If no, Small Business Relief is not available.

If yes, continue.

Question 2: Are you a Qualifying Free Zone Person?

If yes, Small Business Relief cannot be elected while applying QFZP treatment.

If no, continue.

Question 3: Are you an excluded MNE Constituent Company?

If yes, Small Business Relief is unavailable.

If no, continue.

Question 4: Has Revenue exceeded AED 3 million in the relevant or any previous relevant Tax Period?

If yes, the business cannot elect for Small Business Relief.

If no, continue.

Question 5: Does the relevant Tax Period end on or before 31 December 2029?

Under the current MD 131/2026 framework, this is the applicable relief window.

Question 6: Is electing commercially and tax-efficient?

Review:

• Current profit or loss.
• Tax Loss implications.
• Interest.
• Corporate restructuring.
• Other reliefs.
• Related Party transactions.
• Expected future profitability.

Question 7: Are the Revenue records complete?

The business should be able to prove eligibility if the FTA asks.

Question 8: Will the election be made in the Corporate Tax Return?

Eligibility alone is not enough.

Small Business Relief Decision Table

Situation	Potential treatment
UAE Resident Person, Revenue AED 2.5m, no prior threshold breach	May be eligible
UAE Resident Person, Revenue AED 2.5m but prior period Revenue AED 3.4m	Not eligible
QFZP with Revenue AED 1m	Cannot elect while QFZP
Non-QFZP Free Zone Resident Person below threshold	May potentially elect
Non-Resident Person below AED 3m	Not eligible
MNE Constituent Company within excluded group	Not eligible
Eligible Resident Person with current-year Tax Loss	May elect, but should consider loss consequences
Tax Group with consolidated Revenue AED 3.2m	Not eligible based on group-level threshold
Eligible business that does not make election	Ordinary Corporate Tax rules apply

This is a practical summary and should be applied to the actual facts of the business.

Small Business Relief Filing Checklist

Before making the election, confirm:

Eligibility

• Resident Person status confirmed.
• Revenue for current Tax Period calculated.
• Revenue for all previous relevant Tax Periods reviewed.
• No period has exceeded AED 3 million.
• Relevant Tax Period falls within the current relief window ending on or before 31 December 2029.
• QFZP exclusion considered.
• MNE Group exclusion considered.
• Artificial-separation risk considered.

Tax Decision

• Accounting result reviewed.
• Current Tax Loss position reviewed.
• Brought-forward Tax Losses reviewed.
• Financing and Net Interest Expenditure reviewed.
• Planned restructuring transactions reviewed.
• Related Party transactions reviewed.

Compliance

• Corporate Tax registration completed.
• Accounting records maintained.
• Revenue evidence retained.
• Simplified Corporate Tax Return prepared.
• Small Business Relief election made for the Tax Period.
• Filing completed by the applicable deadline.
• Records retained for the required period.

For a broader year-end review, use MKCA’s Corporate Tax Compliance Checklist.

Small Business Relief vs Not Electing: A Practical Comparison

Issue	Elect Small Business Relief	Do not elect
Taxable Income	Treated as none	Calculated normally
Corporate Tax for period	No CT under SBR treatment	Depends on Taxable Income
Return	Simplified	Full Corporate Tax Return
Current-period Tax Loss	Cannot accrue/carry forward under SBR	May potentially be available under normal rules
Existing prior Tax Losses	Preserved subject to conditions, but not used in SBR period	May potentially be utilised
Current-period Net Interest carry-forward	Not available under SBR	Normal rules apply
Certain other reliefs	Do not apply during SBR period	May potentially apply
TP documentation under Article 55	Not required under SBR treatment	Normal requirements may apply
Arm’s length principle	Still applies	Applies
Record keeping	Required	Required

This is why Small Business Relief should be treated as an election, not an automatic checkbox.

Common Small Business Relief Mistakes

Mistake 1: Using profit instead of Revenue

The eligibility threshold is AED 3 million of Revenue.

A company with low profit can still exceed the threshold.

Mistake 2: Looking only at the current Tax Period

Historical Revenue matters.

Once the applicable Revenue threshold has been exceeded in a relevant period, later lower Revenue does not simply restore eligibility.

Mistake 3: Using the old 31 December 2026 end date

This is now outdated.

Ministerial Decision No. 131 of 2026 extended the relief to relevant Tax Periods ending on or before 31 December 2029.

Mistake 4: Assuming no tax means no filing

Eligible persons still need to file a simplified Corporate Tax Return and make the election.

Mistake 5: Assuming no tax means no records

The FTA can ask the business to demonstrate its Revenue and eligibility.

Mistake 6: Automatically electing during a loss year

A current-year Tax Loss cannot be carried forward from a Tax Period for which Small Business Relief is elected.

Mistake 7: Assuming all Free Zone companies are excluded

The specific exclusion applies to a Qualifying Free Zone Person.

A non-QFZP Free Zone Person may potentially qualify if the other conditions are satisfied.

Mistake 8: Ignoring Related Party pricing

The formal Transfer Pricing documentation obligation may be reduced, but the arm’s length principle still applies.

Mistake 9: Artificially splitting one business

The Corporate Tax rules specifically address artificial separation designed to obtain the relief.

Should a Profitable Small Business Elect?

Often the relief can be attractive to a profitable eligible business because it can eliminate Corporate Tax liability for the period and simplify compliance.

However, the business should still consider:

• Whether Revenue eligibility is clear.
• Whether a restructuring is planned.
• Whether existing Tax Losses exist.
• Whether financing deductions matter.
• Whether the business expects rapid growth.
• Whether Related Party transactions need additional analysis.

A simple business with Revenue below AED 3 million and positive profits may have a relatively straightforward decision.

A growing group with losses, financing and intercompany transactions may need a more detailed assessment.

Should a Loss-Making Business Elect?

This decision requires more care.

Suppose an eligible company has:

• Revenue: AED 2 million.
• Tax Loss that could otherwise arise: AED 600,000.

If it elects for Small Business Relief, the company receives simplified compliance but cannot create and carry forward that Tax Loss from the SBR period.

If it does not elect, there may be no Corporate Tax payable anyway because the company is loss-making, while the Tax Loss may potentially be available for future periods subject to the Corporate Tax rules.

The correct decision therefore depends on the expected future value of the loss and the company’s circumstances.

Should a Growing Business Elect?

A company approaching AED 3 million should monitor Revenue carefully.

For example:

• January to June Revenue: AED 1.6 million.
• July to September Revenue: AED 900,000.
• Revenue by September: AED 2.5 million.

Management should not wait until year-end to determine whether the threshold will be breached.

Forecasting can help the business understand whether ordinary Corporate Tax calculation and documentation will be required.

If Revenue ultimately exceeds AED 3 million, the company needs to prepare its Corporate Tax position under the ordinary rules.

What Happens After 31 December 2029?

Under the current legislation, the AED 3 million Small Business Relief threshold applies to qualifying Tax Periods ending on or before 31 December 2029.

Businesses should not assume today that the relief will automatically continue beyond that date.

The Ministry of Finance could issue future amendments, but any extension should be based on an official decision rather than an expectation.

Businesses with Tax Periods approaching or extending beyond the current end date should therefore verify the legislation applicable at that time.

Frequently Asked Questions About UAE Small Business Relief

What is the Revenue limit for Small Business Relief in the UAE?

The current Revenue threshold is AED 3 million.

Revenue must not exceed the threshold in the relevant Tax Period or applicable previous Tax Periods.

Is the Small Business Relief threshold AED 3 million of profit?

No.

It is a Revenue threshold, not a profit threshold.

Does Small Business Relief still end in 2026?

No.

Ministerial Decision No. 131 of 2026 extended the current relief period so that the AED 3 million threshold applies to relevant Tax Periods ending on or before 31 December 2029.

Do I have to register for Corporate Tax if I qualify for Small Business Relief?

Yes, where the business is required to register for Corporate Tax.

The relief is elected through the Corporate Tax Return.

Do I still have to file a Corporate Tax Return?

Yes.

Eligible persons electing for Small Business Relief file a simplified Corporate Tax Return.

Is Small Business Relief automatic?

No.

An eligible Resident Person must make an election for each relevant Tax Period.

Can a Free Zone company claim Small Business Relief?

A Qualifying Free Zone Person cannot elect for Small Business Relief.

A Free Zone Person that is not a QFZP may potentially qualify where it satisfies the remaining conditions.

Can a company claim Small Business Relief again after Revenue exceeds AED 3 million?

Under the current rules, no.

If Revenue exceeds AED 3 million in a relevant or previous Tax Period, the business cannot later become eligible merely because Revenue falls below the threshold again.

Can Small Business Relief be used by a Tax Group?

Potentially, but the AED 3 million threshold applies to the Tax Group as a single Taxable Person.

Can I carry forward a loss from a Small Business Relief year?

A Tax Loss arising in a Tax Period for which Small Business Relief is elected cannot be carried forward under the normal Tax Loss rules.

What happens to Tax Losses from earlier years?

Eligible Tax Losses created in prior periods where Small Business Relief was not elected can remain carried forward, subject to the applicable conditions, and may potentially be used in a later Tax Period in which Small Business Relief is not elected.

Do Transfer Pricing rules disappear under Small Business Relief?

No.

The formal Transfer Pricing documentation requirement under the relevant provision does not apply in the same way, but the arm’s length principle still applies to Related Party and Connected Person transactions.

How long should records supporting Small Business Relief be kept?

Relevant Corporate Tax records should generally be retained for seven years following the end of the Tax Period to which they relate.

Is Small Business Relief always better than normal Corporate Tax?

No.

Factors such as Tax Losses, financing costs, restructuring transactions and future profitability can affect the decision.

How MKCA Can Help With Small Business Relief

Determining eligibility is often straightforward for a small company with one activity and clean accounting records.

The decision can become more complicated where the company has:

• Revenue close to AED 3 million.
• Revenue from several activities.
• Prior Tax Losses.
• Current losses.
• Significant financing.
• Related Party transactions.
• Free Zone status.
• Multiple entities.
• Planned restructuring.
• Rapid growth.

MKCA can support UAE businesses with:

• Small Business Relief eligibility assessment.
• Revenue calculation and review.
• Historical Revenue testing.
• Corporate Tax registration and compliance.
• Review of Tax Loss implications.
• Related Party and Transfer Pricing review.
• Corporate Tax Return preparation.
• Small Business Relief election assessment.
• Ongoing Corporate Tax compliance.

Businesses that need help deciding whether the election is appropriate can use MKCA’s Corporate Tax Advisory Services.

If the business has already determined that it is eligible and needs support preparing the return and election, MKCA’s Corporate Tax Return Filing Services can support the filing process.

Conclusion

Small Business Relief can provide a significant Corporate Tax and compliance benefit to eligible UAE Resident Persons, but the rules need to be applied carefully.

The current Revenue threshold is AED 3 million, and Ministerial Decision No. 131 of 2026 has extended the relief to relevant Tax Periods ending on or before 31 December 2029.

Eligibility depends on Revenue in both the current and previous relevant Tax Periods.

The business must also be a Resident Person and must not fall within an excluded category such as a Qualifying Free Zone Person or applicable MNE Constituent Company.

Most importantly, the relief is an election.

Before making it, businesses should consider not only the immediate Corporate Tax saving but also the impact on Tax Losses, financing deductions, other Corporate Tax reliefs and future periods.

Even after electing, the business must remain registered, file its simplified Corporate Tax Return and retain evidence supporting its Revenue and eligibility.