Three more years
The relief now covers tax periods ending on or before 31 December 2029, up from 31 December 2026. It applies to periods commencing on or after 1 June 2023, so it reaches back as well as forward.
Law update · August 2026
UAE Corporate Tax Relief 2029: What Small Businesses Need to Know
The UAE just handed small businesses three extra years of breathing room. Small Business Relief, which was due to expire for periods ending December 2026, now runs to 31 December 2029. If your annual revenue stays at or under AED 3 million, you can elect to be treated as having no taxable income, which works out to an effective 0% corporate tax bill. But one revenue rule trips up more owners than any other. Here is what changed, who qualifies, and how to stay on the right side of it.
31 Dec 2029New end date for Small Business Relief (was Dec 2026), via Ministerial Decision No. 131
AED 3M revenueThe threshold is revenue, not profit, and it is unchanged
Elect every periodYou must elect the relief in each tax return; skip it and normal rules apply
The news
What the 2029 extension actually changed
In August 2026 the Ministry of Finance issued Ministerial Decision No. 131, pushing the Small Business Relief window out by three years. Here is the short version.
Same AED 3 million threshold
Annual revenue of AED 3 million or less still sets the line, and it is revenue, not profit. A consultancy billing AED 2.9 million with a 60% margin qualifies just the same as a trading firm billing AED 2.9 million on thin margins. The threshold did not move.
Still an election, not automatic
Nothing happens unless you elect the relief in that period's tax return. Elect it, and you are treated as having derived no taxable income for the period. Skip the election, and the normal 0%/9% rules apply. It is a choice you make every period, deliberately.
The official reasoning: SMEs are over 94% of UAE businesses and produce most non-oil GDP, so the Ministry wants the relief to keep founders investing while the tax system matures.
Before vs now
The extension side by side
One decision, one real change. Everything else stayed put.
Small Business Relief: before and after Decision No. 131
| Before | Now | |
|---|---|---|
| Relief available for | Tax periods ending on or before 31 Dec 2026 | Tax periods ending on or before 31 Dec 2029 |
| Revenue threshold | AED 3 million | AED 3 million, unchanged |
| Effect of electing | Treated as having no taxable income | Same |
| Filing obligation | Simplified return still due on time | Same |
| Legal basis | Ministerial Decision No. 73 of 2023 | Amended by Ministerial Decision No. 131 of 2026 |
What did not change matters just as much: the threshold, the election mechanic, and the filing duty all stayed put. If a piece of advice online still says the relief ends in 2026, it is out of date.
Eligibility
Who qualifies, and the revenue trap
The relief is for resident taxable persons, companies and natural persons doing business, whose revenue stays at or under AED 3 million. Qualifying Free Zone Persons are carved out (they have their own 0% regime on qualifying income), as are members of large multinational groups.
Now the trap, because this is the part that costs people money. The revenue test covers the relevant period and every previous one. Go over AED 3 million once, in any year, and you can never elect the relief again, even if revenue drops back. No reset. One spike year follows you for the whole window.
- Pull revenue for every tax period since 1 June 2023, not profit but revenue, measured under UAE-accepted accounting standards.
- Confirm you are a resident taxable person and not excluded as a QFZP or MNE-group member.
- Watch partial years and one-off spikes: a single big contract can end your eligibility for good.
- Decide the election consciously each period: there is a trade-off (see below), so do not elect on autopilot.
Common confusion
The relief vs the 0% band: don't mix them up
Two different mechanisms, both called "0%" in casual conversation. They are not the same thing.
Side by side
| 0% tax band | Small Business Relief | |
|---|---|---|
| What it is | The standard rate structure: 0% on taxable income up to AED 375,000, 9% above | An election under Article 21: you are treated as having no taxable income at all |
| Who gets it | Every taxable person, automatically | Only eligible resident persons who elect it, revenue ≤ AED 3M |
| Needs an election? | No | Yes, in each tax return |
| Registration still required? | Yes, both. Every taxable person registers on EmaraTax and files, even with zero tax due. Late registration risks an AED 10,000 FTA penalty. | |
The practical point: a company with AED 2M revenue and AED 1M profit pays 9% on AED 625,000 under normal rules. Elect the relief and the bill is zero. That is why the election matters.
Our UAE corporate tax guide walks through the full rate structure if you want the complete picture, and the corporate tax service page covers registration and filings.
The trade-off
What you give up when you elect
The relief is not free money. It has a price, and for some businesses the price is too high.
No loss carry-forwards while elected
Tax losses from a relief period cannot be carried forward. If you are a startup burning cash now and expecting big profits in 2028, those early losses could have sheltered later income, and electing the relief throws that shelter away.
No net interest carry-forward either
Excess net interest expenditure from an elected period is similarly stranded. Leveraged businesses should run the numbers both ways.
Do the maths before you tick the box
For a profitable small business, the relief is usually a clear win: zero tax beats a small carried loss. For a pre-revenue startup with heavy early losses, preserving those losses can be worth more than wiping out a tiny current-year bill. This is a modelling exercise, not a reflex, and clean monthly books make it possible.
Action plan
What to do before 2029
- Register on EmaraTax if you have not. Relief or no relief, registration is mandatory, and the late-registration penalty is AED 10,000. Our EmaraTax walkthrough covers the steps.
- Track revenue monthly against the AED 3M line, with a buffer. Remember, one breach ends future eligibility, so "roughly under" is not good enough.
- Elect deliberately each period, after checking the loss trade-off. Put the decision in your year-end routine.
- Keep seven years of records. The FTA can ask to see the revenue figures behind your election, and "the accountant has them" is not a filing system.
- Model the year you cross AED 3M. From that period you are on normal rules, 9% above AED 375,000. Plan cash flow a year early, not a month.
- Diarise every filing deadline (nine months after your financial year-end). The relief removes the tax, not the deadline. See our UAE tax deadlines calendar.
FAQs
Relief questions, answered
What is the UAE corporate tax relief 2029?
The extension of Small Business Relief to tax periods ending on or before 31 December 2029, via Ministerial Decision No. 131 (August 2026). Eligible businesses with annual revenue of AED 3 million or less can elect to be treated as having no taxable income, an effective 0% bill for the period.
Who qualifies for Small Business Relief until 2029?
Resident taxable persons, companies and natural persons doing business, with revenue of AED 3 million or less in the relevant period and all previous periods. Qualifying Free Zone Persons and members of large multinational groups are excluded.
Is the AED 3 million threshold revenue or profit?
Revenue. A business with AED 2.9 million of revenue qualifies regardless of its profit margin, as long as every other condition holds. Revenue is measured under UAE-accepted accounting standards.
If my revenue exceeds AED 3 million one year, can I claim relief later?
No. The test covers the relevant period and all previous ones, so one breach ends later eligibility too, even if revenue falls back. No reset.
Do I still need to register and file if I claim the relief?
Yes. EmaraTax registration is mandatory for taxable persons, and a simplified return is still due each period within the legal deadline. Late registration can attract an AED 10,000 FTA penalty.
What is the difference between Small Business Relief and the 0% tax band?
The 0% band is the standard rate structure, 0% on taxable income up to AED 375,000 and 9% above, and it applies to everyone automatically. Small Business Relief is an Article 21 election available only to eligible small businesses that treats you as having no taxable income at all for the period.
Can free zone companies claim Small Business Relief?
Qualifying Free Zone Persons cannot; they already benefit from 0% on qualifying income under their own regime. Other free zone companies that are ordinary taxable persons may qualify if they meet the revenue and residency tests.
Keep reading
Related guides
Ready when you are
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