Ministerial Decision No. 131 of 2026, announced by the Ministry of Finance on 7 August 2026, pushed the Small Business Relief sunset from 31 December 2026 out to tax periods ending on or before 31 December 2029. Three more years of 0% for eligible businesses, same AED 3 million threshold, nothing else changed.
Most of the coverage treated that as the end of the story. It is not. For a growing SME, the 2029 date was never the real risk. The AED 3 million revenue threshold is, because crossing it once removes the relief permanently, and a lot of owners are going to walk into that in 2027 or 2028 without seeing it coming.
For the decision itself and what it changed, see our note on Ministerial Decision No. 131 of 2026. This guide is about what to do with the three years you just got.
The threshold is a one way door
Ministerial Decision No. 73 of 2023 grants the relief where revenue is below AED 3 million in the relevant tax period and in every previous tax period. The Ministry of Finance states the consequence plainly: once a taxable person exceeds the AED 3 million revenue threshold in any tax period, Small Business Relief is no longer available.
Not suspended for that year. Not available again when revenue drops back. Gone.
That wording is doing a lot of work and it is the single most missed point in this topic. Revenue is also measured on revenue, not profit, determined under the accounting standards accepted in the UAE. A business can be barely breaking even and still breach the threshold on turnover alone.
What that costs: a worked example
Take a Dubai consultancy that has elected Small Business Relief every year since 2023. Two versions of its 2027:
| Scenario A: revenue AED 2,980,000 | Scenario B: revenue AED 3,020,000 | |
|---|---|---|
| Small Business Relief | Available, elected | Unavailable, permanently |
| 2027 taxable income | Treated as nil | AED 780,000 |
| 2027 corporate tax | AED 0 | (780,000 minus 375,000) x 9% = AED 36,450 |
The difference in revenue between those two columns is AED 40,000. The difference in tax is AED 36,450. That last AED 40,000 of turnover is taxed, in effect, at 91%.
And it does not stop in 2027. Because the breach is permanent, Scenario B keeps paying while Scenario A keeps electing:
- 2028 taxable income AED 800,000: (800,000 minus 375,000) x 9% = AED 38,250
- 2029 taxable income AED 850,000: (850,000 minus 375,000) x 9% = AED 42,750
Total cost of that AED 40,000 of extra 2027 revenue, across the remaining relief window: AED 117,450.
This is why we tell clients approaching the threshold to look at revenue timing seriously in Q4. Not to hide income, which is not on the table, but because the difference between invoicing a project in December and January can be a six figure decision. Note the boundary with Article 50 of Federal Decree-Law No. 47 of 2022: Ministerial Decision No. 73 of 2023 specifically flags that artificially separating a business to stay under AED 3 million is treated as an arrangement to obtain a corporate tax advantage under the general anti-abuse rule. Splitting one trading company into two licences to keep both under the threshold is the wrong answer and the FTA has named it.
The trap on the other side: electing in a loss year
Here is the part almost no guide covers. The election is not free.
If you elect Small Business Relief for a tax period, you cannot utilise, accrue or transfer any tax losses or net interest expenditure arising in that period. They are forfeited, not deferred. If you do not elect, Ministerial Decision No. 73 of 2023 lets you carry those losses and disallowed interest forward for use in future periods where you are not electing.
So a loss making startup that reflexively elects SBR every year is destroying an asset. Under Article 37 of Federal Decree-Law No. 47 of 2022, tax losses carry forward indefinitely and can shelter up to 75% of taxable income in a later period.
A startup with a AED 400,000 tax loss in 2027 that elects SBR gets a tax bill of zero, which it would have had anyway on a loss. It also throws away AED 400,000 of carry forward, worth up to AED 36,000 of tax at 9% once it is profitable. Electing cost it AED 36,000 to save nothing.
Should you elect this period?
| Your position | Elect Small Business Relief? | Why |
|---|---|---|
| Profitable, revenue comfortably under AED 3M | Yes | Straight saving, nothing forfeited that has value. |
| Loss making, revenue under AED 3M | Usually no | Electing forfeits the loss. Filing normally banks it for later. |
| Large disallowed interest in the period | Model it first | Net interest expenditure is forfeited on the same basis as losses. |
| Revenue tracking toward AED 3M | Yes, and plan the cliff | The breach is permanent. Forecast before year end, not after. |
| Qualifying Free Zone Person | Not eligible | Excluded by Ministerial Decision No. 73 of 2023. |
| Member of an MNE Group | Not eligible | Excluded where group consolidated revenue exceeds AED 3.15 billion under Cabinet Decision No. 44 of 2020. |
Decision flow
- If you are a resident person and revenue in this and every prior period is under AED 3 million, then you are eligible.
- If eligible and the period is profitable, then elect in the return.
- If eligible but the period produced a tax loss or material disallowed interest, then model both outcomes before electing.
- If forecast revenue is within roughly 10% of AED 3 million, then run the multi year cost of a breach before you sign the last invoices of the year.
- If you have already breached in any period, then the relief is gone for good and you plan on the standard 0% and 9% bands instead.
What the relief does not excuse
Electing Small Business Relief does not put you outside the regime. You must still:
- Register for corporate tax. Late registration carries an AED 10,000 penalty under Cabinet Decision No. 75 of 2023 as amended by Cabinet Decision No. 10 of 2024.
- File a return for every tax period, because the election is made in the return. There is no separate relief form and nothing happens automatically. Late filing runs at AED 500 per month for the first twelve months and AED 1,000 per month after that.
- Keep records for seven years. The FTA’s own worked example: a tax period ending 31 December 2026 means records retained until 31 December 2033.
- Respect the arm’s length principle on related party transactions under Article 34, even though Ministerial Decision No. 97 of 2023 will not require full transfer pricing documentation at your size.
The most common failure we see is not a technical one. It is a business that elected correctly, saved the tax, and then missed the filing that carries the election. If your first return is still ahead of you, our walkthrough on filing your first UAE corporate tax return on EmaraTax covers where the election sits.
Using the three years properly
- Forecast revenue to 2029, by tax period, and mark the period where you expect to cross AED 3 million. That date, not 31 December 2029, is your real deadline.
- Model the first standard year now. Estimate taxable income, not revenue, so the first bill is a number you planned rather than one you discovered.
- Fix the bookkeeping while it is cheap. The standard regime expects accrual accounting and documentation. Businesses that ran light books under SBR find that catching up mid transition costs more than doing it early.
- Capture every legitimate deduction from the first standard period. Our guide to UAE corporate tax deductible expenses covers the 50% entertainment cap and the interest limitation.
- Review structure early. Group arrangements and legitimate reliefs take time to put in place and cannot be applied retrospectively.
How Harrison & Morgan helps
We model the threshold decision for SME clients every year, and we prepare businesses for the transition out of the relief before it becomes urgent. Our Corporate Tax Advisory team handles eligibility, the election and the multi year forecast; our CFO Advisory team builds the revenue plan around the cliff; and our Bookkeeping & Accounting team gets the records to the standard the regime expects.
Approaching AED 3 million, or unsure whether to elect this year? Book a free consultation and we will model both outcomes with your numbers.
Frequently asked questions
When does UAE Small Business Relief end?
Ministerial Decision No. 131 of 2026 extended it to tax periods ending on or before 31 December 2029. The previous sunset was 31 December 2026. The AED 3 million revenue threshold is unchanged.
What happens if my revenue goes over AED 3 million once?
Small Business Relief becomes permanently unavailable. Ministerial Decision No. 73 of 2023 grants the relief only where revenue is below AED 3 million in the relevant period and in all previous periods, so the relief does not return if revenue falls back below the threshold in a later year.
Is the AED 3 million threshold based on revenue or profit?
Revenue, determined under the accounting standards accepted in the UAE. Profitability is irrelevant to eligibility, so a low margin business can breach the threshold while earning very little.
Should I always elect Small Business Relief if I am eligible?
No. Electing means you cannot carry forward tax losses or disallowed net interest expenditure arising in that period. In a loss making year, electing can forfeit a carry forward worth up to 9% of the loss in future tax, in exchange for a saving of nothing.
Do I still need to file a corporate tax return if I elect the relief?
Yes. The election is made in the tax return, so the filing is what delivers the relief. Registration is also still required. Late registration carries an AED 10,000 penalty and late filing runs at AED 500 per month for the first twelve months, then AED 1,000 per month.
Can a free zone company claim Small Business Relief?
Not as a Qualifying Free Zone Person. Ministerial Decision No. 73 of 2023 excludes Qualifying Free Zone Persons and members of Multinational Enterprise Groups from the relief.
About the author. Prepared by the advisory team at Harrison & Morgan Business Advisory, led by CA Mohammed Rinshad P R, a Chartered Accountant advising UAE businesses on corporate tax, VAT and compliance. General information only, accurate to the best of our knowledge as at 1 September 2026. Verify against Ministerial Decision No. 73 of 2023, Ministerial Decision No. 131 of 2026 and current FTA guidance before acting.