Guide · updated August 2026

Small Business Relief: the UAE's zero-tax lifeline for SMEs

By Hamza Maghrabi · Last updated 21 August 2026

Small Business Relief (Ministerial Decision No. 73 of 2023) lets qualifying small businesses pay no corporate tax at all — but it's an election with conditions and a hard end date. Here's how it works and where owners get caught out.

The test: AED 3 million revenue

You can elect the relief if your revenue is AED 3,000,000 or less in the relevant tax period and in every previous tax period. It's a revenue test, not a profit test — a business with AED 2.9M revenue and AED 1M profit qualifies; one with AED 3.1M revenue and AED 200K profit does not.

Cross AED 3M once and you lose eligibility permanently — the test looks at all previous periods too. If Q4 revenue would tip you over the line, understand the cost before invoicing.

The deadline: 31 December 2029 (extended)

The relief now applies to tax periods ending on or before 31 December 2029 — Ministerial Decision No. 131 of 2026 (announced 7 August 2026) extended the original 2026 cut-off by three years, with the AED 3M test and all other conditions unchanged. For a business with a December year-end, 2029 is the final year — after that, standard 0%/9% bands apply to everyone.

Who cannot use it

Qualifying Free Zone Persons (they have their own 0% regime).
Members of multinational groups with consolidated revenue over AED 3.15 billion.
Businesses artificially split into pieces to stay under AED 3M — the FTA treats this as tax abuse.

How to elect

Register for corporate tax as normal (the relief doesn't remove the registration duty).
File your return within 9 months of year end.
Tick the Small Business Relief election on the return.

That's it — you're treated as having no taxable income for that period. Note the trade-offs: while relieved, you cannot carry forward tax losses or claim net interest deductions from that period.

Should you elect it?

Almost always yes if you qualify — with one exception: a business making losses might prefer to skip the relief and bank the loss to offset future profits. That's a one-question conversation with a licensed UAE tax agent, and worth having before you file.

Estimate your position first with the corporate tax calculator — it has Small Business Relief built in.

General information, not tax advice. Confirm with a licensed UAE tax agent before filing.

Conditions and mechanics

Who can elect, and what it actually does

Small Business Relief is the most valuable provision in the UAE corporate tax regime for genuinely small businesses, and the most misunderstood. It does not reduce your rate. It treats you as having no taxable income at all for the period, which produces a tax bill of zero.

The conditions

Revenue test	Revenue must be AED 3,000,000 or less in the relevant tax period and in every previous tax period. Once you have exceeded it in any period, you cannot elect again in a later one even if revenue falls back.
Residence	Available to resident taxable persons only.
Not a QFZP	A Qualifying Free Zone Person cannot elect it. The two regimes are alternatives, not a stack.
Not part of a large group	Members of multinational enterprise groups above the large-group revenue threshold are excluded.
Elected, not automatic	You claim it on the return for each period. Not filing means not electing.

Extended to 2029

The relief originally applied only to tax periods ending on or before 31 December 2026. Ministerial Decision No. 131 of 2026, announced on 7 August 2026, extended it to periods ending on or before 31 December 2029. The revenue test and every other condition were left unchanged. For a business under AED 3,000,000 that is three additional years at zero corporate tax.

Revenue, not profit

The AED 3,000,000 test is measured on revenue, meaning gross income, not on profit. A business turning over AED 3,500,000 with a slim margin cannot elect, while one turning over AED 2,000,000 with a very healthy margin can. This catches people who reason from their tax position rather than from their top line.

You still file

The FTA confirmed on 3 August 2026 that taxable persons electing the relief must still submit a return, in simplified form, by the normal deadline. Registration, record keeping and the nine-month filing deadline all continue to apply, and the late filing penalty of AED 500 per month applies to a nil return exactly as it does to one with tax on it.

What it costs you

Electing the relief means you cannot use tax losses from that period, and you cannot carry them forward for use later. For a loss-making business that expects profits soon, taking the relief in a loss year can be worse than not taking it, because it discards a loss that would otherwise have sheltered future profit. Run that comparison before electing rather than treating the relief as automatically the better answer.

Common questions

What is Small Business Relief?

An election that treats a resident business with revenue of AED 3,000,000 or less as having no taxable income for the period, producing zero corporate tax. It is claimed on the return, not applied automatically.

Has Small Business Relief been extended beyond 2026?

Yes. Ministerial Decision No. 131 of 2026 extended it to tax periods ending on or before 31 December 2029, with the AED 3,000,000 revenue test and all other conditions unchanged.

Is the AED 3,000,000 test based on revenue or profit?

Revenue, meaning gross income. A business with AED 3,500,000 of revenue cannot elect even if its profit is very small.

Can a free zone company elect Small Business Relief?

Not while it is a Qualifying Free Zone Person. The two regimes are alternatives. A free zone company that is not a QFZP can elect if it meets the conditions.

Is there a downside to electing the relief?

Yes. Tax losses from a period covered by the relief cannot be used or carried forward. For a loss-making business expecting future profits, electing can discard a loss worth more than the relief.