In short. A UAE resident business with revenue of AED 3 million or less can elect to be treated as having no taxable income — so no corporate tax is payable for that period.
In August 2026 the Ministry of Finance extended the relief by three years. It now covers tax periods ending on or before 31 December 2029. The AED 3 million threshold is unchanged.
The relief is an election made in the return. You still register, file and keep records.
What the relief does
Normally a business pays 0% on taxable income up to AED 375,000 and 9% above it, after working through a full tax computation. A business that elects Small Business Relief skips that: it is treated as having derived no taxable income for the period. The return is shorter, there is no tax to pay, and several of the more technical rules — such as transfer pricing documentation — are switched off for the period.
Who qualifies
- You are a resident person — a UAE company, or an individual carrying on a business in the UAE.
- Your revenue is AED 3 million or less in the tax period and in every previous tax period since corporate tax began.
- You are not a Qualifying Free Zone Person and not a member of a multinational group with consolidated revenue above AED 3.15 billion.
- You have not artificially split one business into several to stay under the limit.
The test is revenue under the accounting standards you apply — not profit, and not cash received. A business with revenue of AED 2.9 million and a high margin qualifies; a business with revenue of AED 3.2 million and a loss does not.
What changed in 2026
Under the original decision the relief ended with tax periods closing on 31 December 2026, and many small businesses were preparing to move into the standard regime from 2027. Ministerial Decision No. 131 of 2026 moved the end date to tax periods ending on or before 31 December 2029. Nothing else about the conditions changed, and the election must still be made each year.
How to elect
- Prepare financial statements for the period, so revenue is a supportable figure.
- Confirm revenue was within AED 3 million in this period and all earlier ones.
- In the EmaraTax corporate tax return, select the Small Business Relief election.
- Submit by the normal deadline — nine months after the period end.
- Keep the records that support the revenue figure for seven years.
The three mistakes that lose it
1. Assuming it is automatic
The most common misunderstanding is “we are under AED 3 million, so corporate tax does not apply to us”. It does. Registration is compulsory, and the relief exists only as a box ticked in a return filed on time. A business that does not file has not claimed the relief — and collects late-filing penalties of AED 500 a month while believing it owes nothing.
2. Forgetting that the AED 3 million test looks backwards
Once revenue exceeds AED 3 million in any tax period, the relief is no longer available in that period or any later one, even if revenue falls back. Owners of growing businesses should watch the figure during the year, because timing of a large invoice around the year end can decide whether the door closes. What you cannot do is divide the business among several licences to stay under the line; the general anti-abuse rule is aimed at exactly that.
3. Electing when it costs you more than it saves
The election is not always the best answer. A tax loss made in a period covered by the relief cannot be carried forward, and neither can disallowed interest. A start-up losing money in its first two years, with profits expected later, may be better off filing normally and banking those losses. Free zone companies should take advice before electing, because the election interacts with Qualifying Free Zone Person status. The comparison takes an hour with proper accounts; it is worth doing before the return is submitted, not after.
What to do now
If your year ended on 31 December 2025, your return is due by 30 September 2026. Get the accounts finalised, check revenue for this and earlier periods, compare filing with and without the election, and file on time. With the relief now running to 2029, it is also worth building a simple revenue tracker so you see the AED 3 million line approaching rather than discovering it afterwards.
Sources: Federal Decree-Law No. 47 of 2022, Article 21; Ministerial Decision No. 73 of 2023 on Small Business Relief; Ministerial Decision No. 131 of 2026 extending the relief to tax periods ending on or before 31 December 2029 (announced by the Ministry of Finance, August 2026). Reviewed 18 September 2026.