Small businesses in the UAE have received more breathing room under the country’s Corporate Tax regime. The UAE Ministry of Finance has extended Small Business Relief (SBR) until December 31, 2029, allowing eligible businesses with annual revenue of up to AED 3 million to continue benefiting from the relief, subject to the applicable conditions.
The extension was announced on August 7, 2026, through Ministerial Decision No. 131 of 2026, which amends the existing rules governing Small Business Relief. The AED 3 million revenue threshold has not been increased or changed.
For UAE entrepreneurs, start-ups and smaller companies, the announcement is significant because the relief was previously available only for tax periods ending on or before December 31, 2026.
Here is what the 2029 extension means for businesses.
What Is Small Business Relief in the UAE?
Small Business Relief is a provision under the UAE Corporate Tax framework designed to reduce the tax and compliance burden for eligible smaller businesses and start-ups.
If an eligible business elects for the relief and meets all applicable conditions, it is treated as having not derived Taxable Income during that Tax Period.
This can significantly simplify Corporate Tax compliance for qualifying businesses.
The Federal Tax Authority states that Small Business Relief is available to a Resident Person, including natural persons and juridical persons, subject to the relevant conditions. One of the main conditions is that revenue must not exceed AED 3 million in both the current and all previous Tax Periods covered by the rules.
What Has Changed?
The biggest change is simply the extension of the relief period.
Under the previous framework, the AED 3 million Small Business Relief threshold applied to tax periods ending on or before December 31, 2026.
Ministerial Decision No. 131 of 2026 now extends this to tax periods ending on or before December 31, 2029.
In simple terms:
- Old deadline: December 31, 2026
- New deadline: December 31, 2029
- Revenue threshold: Still AED 3 million
So, businesses do not suddenly get a higher revenue limit. Instead, eligible businesses get three additional years during which the existing Small Business Relief framework can potentially apply.
Who Can Benefit From Small Business Relief?
Not every UAE business with revenue below AED 3 million automatically qualifies. The Federal Tax Authority’s current guidance says the relief can be elected by a Resident Person, provided the applicable conditions are satisfied.
The main eligibility condition is the revenue threshold.
A business must have revenue of AED 3 million or less in the relevant Tax Period and all previous Tax Periods.
This is an important detail that businesses should not overlook.
Example
Imagine a UAE business has:
- AED 2.5 million revenue in 2026
- AED 2.8 million revenue in 2027
- AED 2.9 million revenue in 2028
If it meets all the other conditions, it may potentially elect for Small Business Relief for those relevant periods.
However, if the same business had revenue of AED 4 million in a previous relevant Tax Period, falling below AED 3 million in the current year does not automatically make it eligible.
The FTA provides a similar example showing that exceeding the threshold in a previous Tax Period can prevent a taxpayer from benefiting from the relief in a later period.
Who’s Excluded
- Qualifying Free Zone Persons (QFZPs): free zone companies already enjoying the 0% rate on qualifying income under the free zone regime cannot also claim Small Business Relief – you get one or the other, not both.
- Large multinational group members: companies belonging to a multinational enterprise group with consolidated global revenue of AED 3.15 billion or more are excluded, regardless of how small their UAE operation is.
- Ordinary free zone companies that don’t qualify as QFZPs, and mainland companies, are assessed like any other resident business and can apply as long as they meet the standard conditions.
It’s an Election, Not Automatic
Being under the AED 3 million threshold doesn’t apply the relief by itself, as the business has to actively elect for it when filing its corporate tax return. It’s also worth knowing that choosing the relief means tax losses and net interest expenditure can’t be carried forward for that period, so it’s worth a quick conversation with a tax advisor if your numbers are close to the line.
Small Business Relief: Then vs Now
| Aspect | Before the Extension | After Ministerial Decision No. 131 |
| Relief Available Until | 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) |
| Who Can Claim | Resident persons under the threshold | Same, unchanged |
| Who’s Excluded | QFZPs, large MNE group members | Same, unchanged |
What Are the Benefits for UAE Small Businesses?
The extension is particularly useful for entrepreneurs and smaller companies that are still building their businesses.
1. More time to benefit from tax relief
Eligible businesses now have additional time to potentially use Small Business Relief, with the extension running through tax periods ending on or before December 31, 2029.
2. Lower tax burden
Where the conditions are met and the relief is properly elected, the business is treated as having no Taxable Income for the relevant Tax Period.
3. Simpler Corporate Tax compliance
Small Business Relief is designed to simplify Corporate Tax compliance for eligible smaller businesses, reducing the complexity that may otherwise come with calculating taxable income.
4. Better financial planning
The three-year extension gives entrepreneurs greater certainty when planning business expenses, investments, hiring and expansion.
5. More support for start-ups
The Ministry of Finance said the extension is part of the UAE’s continued efforts to support small businesses and start-ups, strengthen the business environment and enable entrepreneurs to grow and expand.
What Should UAE Businesses Do Now?
If you run a small business in the UAE, the 2029 extension is a good reason to review your Corporate Tax position.
Here are a few things to check:
- Review your revenue: Check whether your revenue is AED 3 million or less for the relevant and previous Tax Periods.
- Check your eligibility: Make sure your business is a qualifying Resident Person and that none of the exclusions apply.
- Review your Free Zone status: If your business is a Free Zone entity, determine whether it is or intends to be a Qualifying Free Zone Person.
- Maintain proper records: Keep accurate financial and accounting records to support your revenue figures and Corporate Tax position.
- Check your Corporate Tax registration: Small Business Relief does not remove applicable Corporate Tax registration requirements.
- Make the election correctly: If eligible, ensure the Small Business Relief election is made for the relevant Tax Period through the Corporate Tax return.
- Do not wait until year-end: Businesses approaching the AED 3 million threshold should monitor revenue throughout the year.
What Does the Extension Mean for New UAE Businesses?
The extension is also relevant to entrepreneurs who are planning to start a business in the UAE.
For a new company, Corporate Tax is an important part of the overall business setup and compliance picture. Understanding potential reliefs such as Small Business Relief can help entrepreneurs plan their business structure and ongoing tax obligations more effectively.
However, entrepreneurs should not choose a business structure solely because they expect to qualify for Small Business Relief.
Factors such as the business activity, ownership structure, Free Zone or Mainland setup, expected revenue, Corporate Tax position and long-term growth plans should all be considered.
As the business grows, its eligibility for Small Business Relief may change.
How AE Setup Can Help
Whether you’re forming a new mainland or free zone company, or reviewing an existing one’s tax position, getting the structure right from day one makes it easier to benefit from relief like this. AE Setup’s team can help you choose the right jurisdiction, complete your company formation, and connect you with accounting and corporate tax specialists to keep your new business compliant and set up to take full advantage of the extended relief through 2029.
