UAE extends Small Business Relief to tax periods ending on or before 31 December 2029
Ministerial Decision No. 131 of 2026 keeps corporate tax Small Business Relief, and its AED 3 million revenue test, running for three more years. The conditions are unchanged.
Small Business Relief for corporate tax now covers tax periods ending on or before 31 December 2029, three years longer than before. Ministerial Decision No. 131 of 2026, issued on 29 July 2026 and announced by the Ministry of Finance on 7 August 2026, amends Ministerial Decision No. 73 of 2023 to that effect. The previous cut-off was 31 December 2026. If you run a resident business whose revenue stays at or below AED 3 million in each tax period, the extension is for you.
What the rules say
The amending decision is short. Article 1 replaces Clause 2 of Article 2 of Ministerial Decision No. 73 of 2023. Under the new clause, the revenue threshold applies to tax periods starting on or after 1 June 2023 and continues to apply to later tax periods ending on or before 31 December 2029. The decision takes effect on the day after its publication (Article 2).
Everything else stays as Ministerial Decision No. 73 of 2023 set it out. That decision implements Article 21 of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its main conditions are:
| Provision of Decision No. 73 of 2023 | Rule |
|---|---|
| Article 2 | Revenue threshold of AED 3,000,000 for each tax period. No election if revenue in the current or any previous tax period exceeded the threshold. Revenue follows accounting standards accepted in the UAE. |
| Article 3 | Not available to a Constituent Company of a Multinational Enterprises Group or to a Qualifying Free Zone Person. |
| Article 4 | Tax losses from a relief year cannot be carried forward. Earlier losses can be used only in later years without the election. |
| Article 5 | Net interest expenditure from a relief year cannot be carried forward. |
| Article 6 | Artificial separation of a business to stay below the threshold is treated as an arrangement to obtain a corporate tax advantage. |
On artificial separation, the Federal Tax Authority asks whether there was a valid commercial purpose and whether the persons concerned carry on substantially the same business, looking at financial, economic and organisational links.
Who is affected
The relief is open to resident persons. That includes mainland companies and resident natural persons carrying on a business, as long as revenue does not exceed AED 3 million in the tax period and has never exceeded it in an earlier one. Two groups stay excluded: Qualifying Free Zone Persons, who sit under the separate 0 per cent free zone regime, and constituent companies of multinational groups within the scope of Cabinet Decision No. 44 of 2020.
Key dates
| Date | Event |
|---|---|
| 1 June 2023 | First tax periods eligible for the relief |
| 29 July 2026 | Ministerial Decision No. 131 of 2026 issued |
| 7 August 2026 | Ministry of Finance announcement |
| Day after publication | Decision takes effect |
| 31 December 2029 | Last date on which an eligible tax period can end |
What it means in practice
The relief has to be elected. It is not an automatic exemption. A qualifying business is treated as having no taxable income for the period, but it must still be registered and must file a return in which the election is made.
The revenue test runs period by period, and the "any previous tax period" rule means one large year ends eligibility for good. Take a hypothetical Dubai mainland consultancy with a calendar tax year. It earns AED 2.4 million in 2026 and elects for the relief. In 2027 a single large contract lifts revenue to AED 3.2 million. It pays corporate tax for 2027 on the normal basis and cannot come back into the relief in 2028 or 2029, even if revenue falls to AED 2 million. A loss made in 2026 cannot be carried into 2027 either, because it arose in a relief year.
For a business choosing where to set up, the extension does not change the comparison with free zones in principle. A Qualifying Free Zone Person cannot elect the relief, so a small company that wants it must give up, or never claim, qualifying free zone status for that period.
Splitting one business into several companies to keep each under AED 3 million is the case Article 6 was written for. If you own several small entities doing similar work, be ready to show a commercial reason for the structure.
What we do not yet know
The decision text gives no Official Gazette publication date, so the Ministry's page does not state the precise effective date. The Ministry has not said whether it will review the relief again before 2029.
This piece appeared in Jurisdicta, Issue 001. General information only; not legal, tax or investment advice.