On August 7, 2026, the UAE Ministry of Finance issued Ministerial Decision No. 131, extending the Small Business Relief for Corporate Tax purposes until December 31, 2029. The relief was originally set to expire at the end of 2026, and this three-year extension gives small businesses and startups significantly more runway to grow before full corporate tax obligations apply.
What Is Small Business Relief?
Small Business Relief was introduced under the UAE Corporate Tax framework (Federal Decree-Law No. 47 of 2022) to reduce the compliance burden on smaller businesses. If your business earns revenue of AED 3 million or less in a given tax period, you can elect to be treated as having no taxable income for that period. This means zero corporate tax liability and simplified filing requirements.
The relief applies to both Mainland and Free Zone entities, provided they meet all eligibility conditions under Article 21 of the Corporate Tax Law and Ministerial Decision No. 73 of 2023 (as amended).
What Changed Under Ministerial Decision No. 131?
Before this decision, Small Business Relief was available only for tax periods ending on or before December 31, 2026. Decision No. 131 extends that deadline by three years to December 31, 2029. Everything else stays the same – the AED 3 million revenue threshold, the eligibility conditions, and the election process.
Here is what this means in practical terms:
- Tax periods ending on or before December 31, 2029 are now covered
- The AED 3 million annual revenue threshold remains unchanged
- Eligible businesses can continue electing zero taxable income each year
- Simplified record-keeping and filing requirements remain in place
Who Qualifies for Small Business Relief?
To claim Small Business Relief, your business must meet all of the following conditions:
- Revenue threshold – Total revenue for the relevant tax period and all previous tax periods must not exceed AED 3 million per period
- Resident person – You must be a UAE tax resident (natural person with a business or a juridical person incorporated or effectively managed in the UAE)
- Not a Qualifying Free Zone Person – If you are already benefiting from the 0% Free Zone Corporate Tax rate, you cannot also claim Small Business Relief
- Not part of a Multinational Enterprise Group – Businesses that are part of a multinational group with consolidated revenue exceeding AED 3.15 billion are excluded
Why This Extension Matters
SMEs make up more than 94% of all businesses in the UAE and contribute over 60% to the country’s non-oil GDP, according to government data. The Ministry of Finance stated that the extension “reaffirms the UAE’s commitment to developing a competitive tax system that supports sustainable economic development.”
For business owners, the extension provides three key benefits:
1. Tax planning certainty through 2029. You now know that if your revenue stays under AED 3 million, you will not owe corporate tax for at least three more years. That makes budgeting and cash flow projections significantly easier.
2. More time to scale before tax obligations kick in. Startups and growing businesses can reinvest revenue without worrying about the 9% corporate tax rate until they cross the AED 3 million mark or until the relief expires – whichever comes first.
3. Reduced compliance costs. Businesses claiming Small Business Relief have simpler filing requirements. You still need to register for corporate tax and file a return, but the process is less complex than a full tax return with detailed financial statements.
Important Reminders
Even if you qualify for Small Business Relief, you still need to:
- Register for Corporate Tax with the Federal Tax Authority (FTA) if you have not already done so
- File your Corporate Tax return within 9 months from the end of your tax period
- Elect for Small Business Relief in each tax return – it is not automatic
- Maintain basic accounting records even under simplified requirements
- Continue VAT compliance separately if your taxable supplies exceed AED 375,000
Failure to register or file on time can result in penalties under Cabinet Decision No. 75 of 2023, starting at AED 10,000 for late registration and AED 500 per month for late filing (up to AED 10,000 maximum).
What Happens After 2029?
The Ministry of Finance has not indicated whether the relief will be extended again beyond 2029. Businesses currently relying on Small Business Relief should use this window to prepare for eventual full corporate tax compliance. That means getting your bookkeeping in order, understanding your deductible expenses, and building the financial reporting infrastructure you will need when the relief expires.
How Harrison and Morgan Can Help
Whether you need help determining if you qualify for Small Business Relief, filing your corporate tax return, or preparing for full compliance when the relief ends, our team is here to assist. We handle corporate tax registration, return filing, VAT compliance, and bookkeeping for businesses across Mainland, Free Zone, and Offshore structures in the UAE.
Contact us at info@harrisonandmorgans.com or call +971 54 752 3359 to discuss your tax position.
Related Reading
- UAE Corporate Tax in 2027: Why the End of Small Business Relief Changes Everything for SMEs
- Filing Your First UAE Corporate Tax Return: EmaraTax Walkthrough, Elections and Penalties (2026)
- Corporate Tax for Freelancers in the UAE: The AED 1 Million Rule Explained
- Is a UAE Free Zone Really 0% Tax? QFZP Rules Explained (2026)