UAE small business relief extended to 2029: What qualifies and how to elect

Published Monday 12 October 2026

Table of contents

• What is small business relief under UAE corporate tax?
• What changed: Relief now runs to 2029
• Who qualifies for small business relief?
• How to elect small business relief
• The trade-offs to weigh before you elect
• Simplify UAE corporate tax admin with Xero
• FAQs on small business relief

Key takeaways

• Small business relief lets an eligible UAE resident business be treated as having no taxable income, so there's no corporate tax to pay for that period.
• The relief now applies to tax periods ending on or before 31 December 2029, extended from the original 2026 cut-off, with the AED 3 million revenue threshold unchanged.
• Relief isn't automatic. You elect it in your corporate tax return on EmaraTax and re-elect for every period you want to claim it.
• You still need to register for corporate tax and file a return, even when you claim the relief.

What is small business relief under UAE corporate tax?

Small business relief is a measure under the UAE corporate tax rules that lets a qualifying resident business be treated as having no taxable income for a tax period. In practice, that means no corporate tax to pay and lighter compliance for that period. You still file a return, but the Federal Tax Authority confirms it's a simplified one.

It sits inside the wider corporate tax system. Under Federal Decree-Law No. 47 of 2022, the UAE applies a 9% corporate tax rate on taxable income above AED 375,000, and there's no personal income tax. Small business relief gives smaller businesses a simpler path while they grow.

What changed: Relief now runs to 2029

The relief is now available for tax periods ending on or before 31 December 2029. That's an extension from the original cut-off of 31 December 2026.

The change came through Ministerial Decision No. 131 of 2026, which amends the earlier Ministerial Decision No. 73 of 2023. As the Ministry of Finance confirmed, the AED 3 million revenue threshold stays the same. For you, it means more certainty and three more years of simpler compliance if you qualify.

Who qualifies for small business relief?

Relief is open to UAE resident taxable persons, including both companies and individuals carrying on a business. The Ministerial Decision that sets the eligibility rules spells out the revenue threshold and the exclusions covered below. The main test is your revenue.

The AED 3 million revenue threshold

Your revenue must be AED 3 million or less in the current tax period and in every previous tax period since 1 June 2023. Revenue is worked out under the accounting standards used in the UAE, so it's a revenue test, not a profit test. Exceed AED 3 million once and the relief is no longer available for that period or any period after it.

Who can't claim it

Some businesses are excluded even if their revenue is under the threshold:

• qualifying free zone persons
• members of multinational enterprise groups with consolidated group revenue above AED 3.15 billion
• non-resident persons, since the relief is only available to UAE resident taxable persons

How to elect small business relief

Relief isn't applied for you. You claim it when you file, and you do it again each period. Here's how:

1. Register for corporate tax with the Federal Tax Authority and get your Corporate Tax Registration Number.
2. Confirm your revenue is AED 3 million or less for the period and every previous period.
3. File your corporate tax return through the EmaraTax portal.
4. Make the small business relief election within that return.
5. Re-elect each tax period you want to claim the relief.

The trade-offs to weigh before you elect

Relief simplifies things, but it isn't always the best choice. The Federal Tax Authority's small business relief guide sets out the main points to weigh:

• You can't carry forward tax losses for a period in which you elect the relief.
• Net interest expenditure can't be carried forward for that period.
• Once your revenue exceeds AED 3 million, the relief is no longer available.
• You still need to keep proper accounting records.

If you expect a loss or heavy interest costs, it can be worth comparing the relief against filing a normal return.

Simplify UAE corporate tax admin with Xero

Keeping clean, up-to-date records makes electing small business relief straightforward. Xero's cloud accounting software helps UAE small businesses track revenue, stay ready for corporate tax, and see where they stand at a glance. That means less time caught in the books, and more time focusing on making your business succeed.

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FAQs on small business relief

Here are common questions about UAE small business relief.

Is small business relief automatic?

No. You must elect it in your corporate tax return each period; it's never applied for you.

Do free zone companies qualify?

Qualifying free zone persons can't elect small business relief, as they already fall under a separate free zone corporate tax treatment.

What happens if your revenue goes over AED 3 million?

You lose eligibility for that period and all future periods, even if your revenue later drops back below the threshold.

Do you still need to file if you claim the relief?

Yes. You must register for corporate tax and file a return, though the return is simplified when you elect the relief.