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UAE Small Business Relief has been extended to 31 December 2029. What that changes, and what it does not.

Updated 9 August 2026 · originally published 2 August 2026 · 7 min read · Corporate Tax

      Correction, 9 August 2026. An earlier version of this article said Small
      Business Relief would end after the 2026 tax period. That was correct when it was written
      and is no longer correct. On 7 August 2026 the Ministry of Finance issued
      Ministerial Decision No. 131, extending the relief by three years. The
      article has been rewritten. If you made a decision based on the earlier version, the
      section below on what has not changed is the part to re-read.
    

If your UAE company has revenue under AED 3 million, there is a good chance you have paid zero corporate tax since the regime started. Not because you were below the profit threshold, but because you elected Small Business Relief. That election was due to run out after the 2026 tax period. It now runs for three more years.

      Small Business Relief is now available for tax periods ending on or before
      31 December 2029, with the AED 3,000,000 revenue threshold unchanged. For a
      business on a calendar financial year, the 2029 return is currently the last one where the
      relief can be elected. If your year runs July to June, the period ending 30 June 2029 is
      your last, and the period ending 30 June 2030 falls outside it.
    

An extension is not an exemption. You still have to file. Electing the relief means you are treated as having no taxable income. It does not mean you are outside the corporate tax regime. You remain registered, and you still submit a return for every tax period — a simplified one, but a return, with a deadline and a penalty for missing it. Businesses that read "no tax to pay" as "nothing to do" are the ones that get caught, and they get caught for the filing, not the tax.

What the relief actually does

Small Business Relief is not a lower rate. A business that elects it is treated as having no taxable income at all for that period. The corporate tax due is zero regardless of how profitable the year was, provided revenue stayed within the limit.

To qualify you need all three of the following:

Revenue of AED 3,000,000 or less in the tax period you are claiming for
Revenue of AED 3,000,000 or less in every previous tax period since June 2023. This is the condition people miss. One period above the limit disqualifies you permanently, even if revenue falls back below afterwards
An explicit election on EmaraTax when you file. It is not applied automatically and a late election is not accepted

Two groups cannot elect it at all, regardless of revenue: Qualifying Free Zone Persons, who already sit under their own 0% regime, and members of multinational groups with consolidated revenue above AED 3.15 billion. Neither of those was changed by the extension.

What the extension does not change

This is the part worth reading twice, because three more years of paying nothing is exactly the situation in which a business stops paying attention.

The threshold is still AED 3,000,000. It was not raised. A business growing at 20% a year that is at AED 2.4m today crosses the line inside two years.
The prior-period test still looks all the way back to June 2023 — and now has three more years to look across. Every year the relief is extended, the window in which a single breach can disqualify you gets wider.
It is still an election, not a default. Miss it on the return and you are taxed under the standard bands even though you qualified.
You still file. See the note above.
The 0% band on the first AED 375,000 is untouched. It is permanent and independent of this relief.

What it looks like when the relief does not apply

Whether that is because you crossed AED 3m, tripped the prior-period test, or reached the end of the extension, the standard bands apply. Tax is charged on taxable income, not revenue, at 0% on the first AED 375,000 and 9% above that.

Taxable income	Tax with relief	Tax without relief
AED 300,000	0	0
AED 500,000	0	11,250
AED 750,000	0	33,750
AED 1,000,000	0	56,250
AED 1,500,000	0	101,250

A business with AED 2.4m revenue and AED 750,000 of profit goes from paying nothing to paying AED 33,750. That is a real cash outflow appearing in a year when nothing about the business itself has changed.

Note the first AED 375,000 stays at 0% for everyone. Losing the relief does not put your whole profit into the 9% band. On AED 750,000 of profit the effective rate is 4.5%, not 9%. You can run your own numbers with the corporate tax calculator.

The trap in the prior-period condition

Because eligibility looks backwards at every period since June 2023, a single good year closes the door for good. A business that turned over AED 3.2m in 2024 and dropped back to AED 2.1m in 2025 and 2026 is not eligible in any of those later years, and if it claimed the relief anyway the returns were wrong.

The extension makes this sharper, not softer. The relief now covers six tax periods rather than three, so there are twice as many years in which one strong year can permanently end your eligibility — and twice as long for a business to forget it is being tested at all. A single AED 3.1m year in 2027 removes the relief for 2028 and 2029 as well, and by then nobody is watching the revenue line for tax reasons because the tax has been zero for four years running.

This is worth checking now rather than at filing. If you elected the relief in a period where you should not have, the position is better corrected voluntarily than found in a review.

Revenue and taxable income are different tests

Eligibility is tested on revenue, which is essentially your total turnover. The tax itself is charged on taxable income, which starts from accounting profit under IFRS and is then adjusted.

That distinction catches people out in both directions. A business with AED 2.9m revenue and AED 40,000 of profit qualifies for a relief that saves it nothing, because it would have been under the AED 375,000 band anyway. A business with AED 2.9m revenue and AED 900,000 of profit qualifies for a relief worth AED 47,250 a year, and will feel its loss sharply.

What to do with the three years

Elect the relief on every return you qualify for. It is not automatic and a late election is not accepted. This is the single most common avoidable cost.
Check every period since June 2023 against the AED 3m line. Confirm you were actually eligible each time you claimed. If you elected in a period where you should not have, that is better corrected voluntarily than found in a review.
Watch the revenue line, not the tax line. Your tax is zero, so it tells you nothing. Revenue is the number that decides eligibility, and it is the one to have in front of you monthly rather than at year end.
Work out your real taxable income anyway. This is the discipline the extension makes easy to drop. If you have been electing the relief, nobody has needed an accurate profit figure for tax purposes yet — and when the relief finally ends, or the day you cross AED 3m, you will need one immediately. Reconstructing a year from receipts in March is how errors get made.
Get your bookkeeping continuous rather than annual. Deductibility depends on having the document. Entertainment is restricted, fines are not deductible at all, and an expense you cannot evidence is an expense you cannot claim.

What happens after 2029?

Unknown, and worth being honest about. The relief was introduced as a transitional measure to ease small businesses into the regime. It has now been extended once, which tells you the Ministry of Finance is willing to extend it, and tells you nothing about whether it will do so again. Plan on the basis of the rule as it stands rather than on the assumption of another extension.

The 0% band on the first AED 375,000 is a separate, permanent feature of the regime and is not affected either way. Any further change would be announced through the Ministry of Finance and the FTA, so confirm the current position before you file rather than relying on any article, including this one. This page said the opposite a week ago.

Watch the revenue line, not the tax line

Your corporate tax is zero, so it tells you nothing about whether you are still eligible. Revenue does. Rakam turns a photo of a receipt into a categorised, VAT-split ledger entry, so both your revenue against the AED 3m line and your real taxable income are figures you can look at today rather than ones you assemble in year four.

Try Rakam free →

This article is general information, not tax advice. It reflects the rules published by the UAE Federal Tax Authority as at August 2026. Your own position depends on facts this article cannot know, including your free zone status, group structure and the adjustments applying to your accounts. Confirm with a qualified tax adviser or the FTA before filing.