The UAE Ministry of Finance has extended Small Business Relief for Corporate Tax purposes to tax periods ending on or before 31 December 2029, giving eligible start-ups and SMEs several more years of simplified compliance. If your business earns AED 3 million or less in annual revenue, here is what the relief means, who qualifies, and how to elect for it correctly.
What Is Small Business Relief Under UAE Corporate Tax?
Small Business Relief (SBR) is an elective relief introduced under UAE Corporate Tax law via Ministerial Decision No. 73 of 2023, and extended by Ministerial Decision No. 131. A resident taxable person that elects for SBR is treated as not having derived any taxable income for that tax period, effectively resulting in a 0% Corporate Tax liability, along with reduced record-keeping and reporting obligations.
Importantly, SBR is not automatic. It must be elected by the taxable person for each tax period in which it wishes to apply the relief, and the business must still register for Corporate Tax and file a return with the Federal Tax Authority (FTA).
Who Is Eligible for Small Business Relief?
To elect for Small Business Relief, a business generally needs to meet the following conditions:
- It is a UAE resident person for Corporate Tax purposes.
- Its revenue for the relevant tax period, and each previous tax period since 1 June 2023, does not exceed AED 3,000,000.
- The relevant tax period falls between 1 June 2023 and 31 December 2029, following the recent extension.
- Revenue is determined in accordance with UAE-accepted accounting standards.
Because the AED 3 million threshold applies on a period-by-period basis, a single year of higher revenue can affect eligibility going forward, so businesses close to the threshold should monitor revenue carefully throughout the financial year.
Who Cannot Claim Small Business Relief?
Small Business Relief is not available to every entity, even if revenue falls below the threshold. The following are generally excluded:
- Qualifying Free Zone Persons benefiting from the 0% Free Zone Corporate Tax regime.
- Members of a Multinational Enterprise (MNE) Group — broadly, groups with consolidated group revenue of AED 3.15 billion or more, in line with OECD Base Erosion and Profit Shifting (BEPS) reporting thresholds.
Businesses in these categories should review the Corporate Tax rules that apply directly to their structure, or speak with an advisor about the reliefs and exemptions that do apply to them.
Key Benefits of Electing for Small Business Relief
- No Corporate Tax payable on qualifying income for the elected tax period.
- Simplified financial statements — eligible businesses can generally prepare accounts on a cash basis rather than full accrual accounting.
- Reduced transfer pricing burden — detailed transfer pricing documentation is generally not required while SBR applies.
- Lower compliance costs, which is particularly valuable for early-stage businesses and start-ups still building out their finance function.
Businesses that outsource their books to an accounting and bookkeeping partner tend to find it easier to track revenue accurately against the AED 3 million threshold and to keep the records needed to support an SBR election.
How to Elect for Small Business Relief
- Register for UAE Corporate Tax with the FTA, even if you expect to owe no tax.
- Track revenue throughout the tax period to confirm it remains at or below AED 3,000,000.
- Make the SBR election when filing your Corporate Tax return for that period — the election is made period by period, not once for all future years.
- Keep supporting records, such as invoices, bank statements and accounting reports, in case the FTA requests evidence of eligibility.
What Happens If Revenue Exceeds the Threshold?
If revenue exceeds AED 3 million in a given tax period, the business cannot elect for Small Business Relief for that period and becomes subject to the standard Corporate Tax rules, including the 9% rate on taxable income above AED 375,000. This is one of the most common triggers for businesses to move from simplified compliance to full Corporate Tax filing, so it is worth planning ahead rather than reacting once the threshold has already been crossed.
Why the 2026 Extension Matters for UAE SMEs
Small Business Relief was originally scheduled to run until 31 December 2026. In August 2026, the Ministry of Finance confirmed an extension of the relief to tax periods ending on or before 31 December 2029, while keeping the AED 3 million revenue threshold unchanged. For SMEs and start-ups, this means several additional years of simplified Corporate Tax compliance, and more time to grow revenue before transitioning to standard filing requirements.
How Elysian Consulting Group Can Help
Our Corporate Tax team helps businesses across Dubai and the wider UAE confirm their eligibility for Small Business Relief, register with the FTA, and stay compliant year after year. If you are unsure whether your business qualifies, or you are approaching the AED 3 million threshold, book a free consultation with our advisors before your next filing deadline.
This article is for general information only and does not constitute tax advice. Corporate Tax treatment depends on each business’s specific facts, so please consult a qualified advisor before making an SBR election.
