UAE Small Business Relief: Extended to 2029

Corporate Tax · SMEs·Published 21 July 2026·9 min read

UAE Small Business Relief has been extended to tax periods ending on or before 31 December 2029. The AED 3 million revenue ceiling and the other conditions remain. Eligible businesses still need to elect through their Corporate Tax return, and the decision should be reviewed each year.

The mechanics

A UAE resident taxable person whose revenue does not exceed AED 3 million in the relevant tax period, and did not exceed it in any previous tax period, can elect in its return to be treated as having no taxable income for that period. No taxable income means no tax, and no detailed taxable income computation for the period. The measure is revenue, not profit: a business with AED 2.9 million of revenue and AED 1 million of profit qualifies, while a business with AED 3.1 million of revenue and AED 50,000 of profit does not.

Three exclusions matter in practice. A Qualifying Free Zone Person cannot elect, which is one of the quiet trade-offs in the mainland versus free zone decision. Constituent companies of multinational groups as defined in Cabinet Decision No. 44 of 2020 cannot elect. This is a separate definition from the Top-up Tax scope test. And the revenue test is cumulative in an unforgiving way: cross AED 3 million once and the relief is gone for good, even if revenue later falls back.

What the election costs, and when it is a mistake

Relief periods do not generate carry-forwards. A tax loss made in an elected period cannot travel forward to shelter future profits, and net interest expenditure cannot be accumulated for later deduction. That makes the election genuinely wrong in some years. A business that made a loss gains nothing from the relief, since a loss produces no tax anyway, but electing burns the loss it could have carried into next year’s profits. The election is annual: the right approach is a small calculation each year, not a standing instruction to tick the box.

What the relief does not remove

Registration, filing, and records all survive the election. The business registers for Corporate Tax, files the return in which it elects, and keeps books capable of proving the revenue figure the whole claim rests on. The FTA has also flagged the obvious abuse: artificially splitting one business across several entities to keep each under AED 3 million invites the anti-abuse rules, and the general anti-abuse provisions let the FTA look straight through arrangements whose main purpose is a tax advantage. Related businesses under common ownership should take the related-party rules seriously before assuming three small entities beat one medium one.

The extension, and what to do now

The extension creates more eligible periods; it does not restart the revenue test or remove the exclusions. Review revenue in the current and every previous tax period, resident status and the QFZP and multinational-group exclusions. A past breach is not cured by the extension. Compare the tax saving with the effect on losses and interest expenditure before electing.

Keep the return and records work on schedule. Use our indicative eligibility check, then discuss the actual election with our Corporate Tax team. Our September update covers the other recent changes.

Small Business Relief questions